Wednesday, September 14, 2011

What is a Financial Bail-Out?

Dale, the Pub Owner.

It is a slow day in a small town... lets say, this is my friend Dale the Pub Owner's hometown. The rain is beating down harshly, and all the streets are deserted. Times are tough, everybody is in debt and everybody lives on credit.

...On this particular day a rich tourist, lets call him.... Earl -Earl is driving through the town, stops at the local hotel and lays a RM100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some room-keys and, as soon as the visitor has walked upstairs, the hotelier grabs the RM100 note and runs next door to pay his debt to the butcher. The butcher takes the RM100 note and rushes down the street to repay his debt to the pig farmer. The pig farmer takes the RM100 note and heads off to pay his bill at the supplier of animal feed and fuel.

The guy at the Farmers' Co-op takes the RM100 note and runs to pay his drinks bill at the friendly neighbourhood pub - yes, Dale's pub lorrr. Dale slips the money along to the local prostitute drinking at the bar - who, in spite of facing hard times, has always gladly offered him her ‘services’ on credit. The hooker then rushes over to the hotel and pays off her room bill to the hotel owner with the RM100 note.

The hotel proprietor quietly replaces the RM100 note back on the counter, so that the rich traveller Earl will not suspect anything.

At that moment the traveller comes down the stairs, states that none of the rooms are satisfactory, picks up the RM100 note, pockets it and leaves town.

...No one has produced anything. No one has earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

And that, dear ladies and gentlemen, is how a basic financial bailout package works !

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