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THE FINANCIAL CRISIS EXPLAINED, They Got You!
By Reverend Bishop Paul Coulbeck of Church of the Universe - Temples of God - Free World Press
Bill is the proprietor of a bar in Toronto. In order to increase sales, he decides to allow his loyal customers, most of whom are unemployed chronic alcoholics, to buy drinks on credit. He keeps track of the drinks consumed on a ledger, granting loans to these known deadbeats. Word gets around and increasing numbers of customers flood into his bar, buying drinks on credit and driving the price up. Taking advantage of his customers' freedom from immediate payment constraints, he increases his gouging prices for wine and beer, the most consumed beverages. His sales volume increases massively. The local bank recognizes these customer debts as valuable future assets and increases Bill's borrowing limit and credit line. They see no reason for undue concern since they have the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert bankers transform these customer "debt" assets into DRUNKBONDS, ALCOHOLIBONDS and RUPEANDPUKEBONDS. Then they bundle these Bonds with Government Bonds and various "Blue Chip Stocks" and call them "SECURED INVESTMENT VEHICLE SECURITIES" (SIVS) and then trade these SIV SECURITIES, behind the scenes, overnight, to other banks in markets worldwide. They insure these "SIVS" Bonds overseas with an insurance company's foreign office because it would be illegal to do it at home! No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling high-priced items sold in banks as CIDS. The Stock Market has a bout of irrational exuberance and hits all time highs on these SIVS. One day, although the prices of the SIVS are still going up, the low introductory priced no-pay loans of the deadbeat drunkards come due and the bank decides that the time has come to demand payment for the NO-JOB-NO-CHANCE predatory loans (toxic assets) incurred by the drunks at Bill's Bar. However, they cannot pay back the debts. Bill cannot fulfill his loan obligations and claims bankruptcy. DRUNKBONDS and ALCOHOLIBONDS drop in price by 95%, RUPEANDPUKEBONDS perform better, stabilizing in price after dropping 80%, they drag the SIVS value down with them. The insurance company claims it will go under if it has to pay off, but it cannot be allowed to because it is too big to fail. The entire economy will go down if it does. The suppliers of Bill's bar, having granted him generous payment schedules and due dates and having invested in the SIV securities themselves are faced with a new situation. The wine supplier claims bankruptcy, the beer supplier is taken over by a competitor. Thousands of long-time employees lose their jobs, can't pay their mortgages and lose their homes. Purchasing power plummets, the reverberations are felt world-wide. The banks and the insurance company are saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties and the FED. Government bailouts flow like gravy. The bank and insurance company heads get big bonuses and golden parachutes. Trillions of “ON PAPER” dollars disappear, no one knows where. The funds required for this bailout are obtained by the printing press, taxes, fines, fees and reduced pension funds levied on the non-drinkers that have never even seen Bill's Rundown Eye-sore Nationwide Bar. Get it? They got you! Blessings and Respect.
© Reverend Bishop Paul Coulbeck 2009
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