Vijay For Victory

What does Bailout mean? Learn Financial jargon in a funny way.

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 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 keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works.

For those of you who have difficulty understanding the current world financial crisis and how it evolved, the below story should help. This story is further to “Learn Banking and Finance in easy way” post.

Once upon a time in a village, a man announced to the villagers that he would buy monkeys for $10.

The villagers seeing there were many monkeys around, they left their form work, went out to the forest and started catching them.

The man bought thousands at $10, but, as the supply started to diminish, the villagers stopped their efforts.

The man further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer rate increased to $25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now act as buyer, on his behalf.

In the absence of the man, the assistant told the villagers: ‘Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for $50.’

The villagers squeezed together their savings and bought all the monkeys.

Then they never saw the man or his assistant again, only now the monkeys were everywhere!

Welcome to WALL STREET.

What is Inflation?

What is Financial Stability?

What is Deposite Insurance?

Now a days everyone is speaking about these terms. But how many of us know what exactly they are?

The explaination is here. Recently I received an e-book, comic, from my friend that explains all financial and banking terms in simple English.

This e-book was released by Reserve Bank of India to disseminate information  regarding the central bank and general banking concepts to various target  groups, including, school and college going children, women, rural and urban poor, defence personnel and senior citizens.

The e-book has been designed in such a way that, Money Kumar will familiarise you with the role and functions of the Reserve Bank of India.

Click here to download the comic.

Alternate Source – Money Kumar