This is one of the best illustrations to understand what Capitalism is all about.
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.
What is Banking is no more a complex thing to explain.
Image Credit : MTTS
He was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio. His eyes were weak, so he never watched television.
But enthusiastically, he sold lots of hotdogs. He was smart enough to offer some attractive schemes to increase his sales.
His sales and profit went up. He ordered more a more raw material and buns and use to sale more. He recruited few more supporting staff to serve more customers. He started offering home deliveries. Eventually he got himself a bigger and better stove. As his business was growing, the son, who had recently graduated from College, joined his father.
Then something strange happened.
The son asked, “Dad, aren’t you aware of the great recession that is coming our way?”
The father replied, “No, but tell me about it.”
Son said, “The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times.”
The man thought that since his son had been to college, read the papers, listened to the radio and watched TV. He ought to know and his advice should not be taken lightly.
So the next day onwards, the father cut down the his raw material order and buns, took down the colourful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs.
Very soon, fewer and fewer people bothered to stop at his hotdog stand. And his sales started coming down rapidly, same is the profit.
The father said to his son, “Son, you were right; we are in the middle of a recession and crisis. I am glad you warned me ahead of time.”
Moral of The Story: It’s all in your MIND! And we actually FUEL this recession much more than we think
Recession – everyone in the world speaks about this today. Wherever you go, you will hear this word. No matter whether it is a small hotel or a multi national company, you will find this word being used widely.
Is this recession something new, that appeared in 2008? No.
Watch the following video…
Amazing predictions; isn’t?
Peter Schiff points to the low savings rate of the United States as its worst malady, citing the transformation from being the world’s largest creditor nation in the 1970s to the largest debtor nation by the year 2000. His extremely bearish views on the U.S. Dollar, the United States stock market, bond market, and the United States economy have earned him the nickname “Dr. Doom.”
Lee LeFever now came up with an excellent video on “Saving Money”, a part of financial basics.
The term Compound Interest has been explained brilliantly in simple terms.