The current economic crisis explained in lahori style

Discussion in 'International Politics' started by musalman, Mar 21, 2009.

  1. musalman

    musalman پاکستان زنده باد

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    Location:
    Lahore
    THE CURRENT ECONOMIC CRISIS EXPLAINED

    Pajja is the proprietor of a Siri-Paya and Nehari Shop in Lahore.
    Sales are low and, in order to increase them, he comes up with a plan
    to allow his customers to eat now and pay later. He keeps track of the
    meals consumed on a ledger.

    Word gets around and as a result increasing numbers of customers flock
    to Pajja’s shop. Pajja’s suppliers are delighted and are very willing
    to sell more and more raw materials for the meals he prepares. Pajja
    shows them his ledger of receivables and they extend him credit.

    A young and dynamic customer service consultant at the local bank
    recognizes these customer debts as valuable future assets and gives
    Pajja a credit line and then increases Pajja’s borrowing limit.

    Taking advantage of his customers' freedom from immediate payment
    constraints, Pajja jacks up the prices of his Nehari and Siri-Paye.
    Customers dont mind as they are not required to pay on the spot. Sales
    volume increases massively; Banks and suppliers lend more; Pajja opens
    more outlets. He sees no reason for undue concern since he has the
    debts of the customers as collateral.

    At the bank's corporate headquarters, expert bankers recognize Pajja's
    customer loans as assets and transform these customer assets into
    BONDS. These negotiable instruments are given exotic names such as
    SIRIBOND, PAYABOND, MAGHAZBOND AND BONGBOND. These securities are then
    listed on the Stock Exchange and traded on markets worldwide. No one
    really understands what the names mean and how the securities are
    guaranteed but, nevertheless, as their prices continuously climb, the
    securities become top-selling items.

    One day, although the prices are still climbing, a credit risk manager
    of the bank decides that the time has come to demand payment of one of
    the debts incurred by Pajja. Pajja in turn asks his clients to pay up.
    One by one they refuse; the clients cannot pay back the debts. Pajja
    refuses to serve them any more. The clients stop coming.

    Pajja is really screwed now. He cannot fulfill his loan obligations
    and therefore claims bankruptcy. All Bonds drop in price by between 80
    to 95%.

    The suppliers of Pajja, having granted generous payment due dates and
    having invested in the securities are faced with similar problems. The
    meat supplier defaults on payment to the sheep and cattle supplier and
    claims bankruptcy. The atta supplier is taken over by a competitor;
    Pajja lays off the cook and staff. Bankruptcies soar, unemployment
    mushrooms.

    The bank that lent the money in the first place is set to collapse. It
    is saved by the Government following dramatic round-the-clock
    consultations by leaders from the governing political parties with
    Pajja commuting back and forth in his Executive jet and Mercedes
    500SEL, brokering the deal.

    The funds required to save the economic collapse are obtained by a tax
    levied on the citizens, most of whom do not eat Nehari or Siri-paye.

    UNDERSTOOD?
     
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  3. shiv

    shiv Regular Member

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    now i get to know how the world got where it is now....thanks to this man
     
  4. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    Waah Waah.... Kya explanation hai Musalman !!! hehehehehe...
     
  5. Rage

    Rage DFI TEAM Stars and Ambassadors

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    Mashallah! Zeba nahi kertahe :D
     

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