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Explaining Modern Finance And Economics Using Booze And Broke Alcoholics

Tyler Durden's picture


Courtesy of reszatonline, who brings us the following allegory by way of Tim Coldwell, we are happy to distill (no pun intended) all of modern economics and finance in a narrative that is 500 words long, and involved booze and broke alcoholics: in other words everyone should be able to understand the underlying message. And while the immediate application of this allegory is to explain events in Europe, it succeeds in capturing all the moving pieces of modern finance.

From reszatonline

Helga is the proprietor of a bar.

She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Helga keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).

Word gets around about Helga’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Helga’s bar. Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Helga’s gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Helga’s borrowing limit.

He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS.These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold to them as “AA” “Secured Bonds” really are debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar.

He so informs Helga.

Helga then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.

Since Helga cannot fulfil her loan obligations she is forced into bankruptcy.

The bar closes and Helga’s 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Helga’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers. Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Helga’s bar.


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Fri, 01/27/2012 - 15:13 | 2103401 killallthefiat
killallthefiat's picture

Where is that bar?  I am unemployed

Fri, 01/27/2012 - 15:16 | 2103419 economics1996
economics1996's picture

That sounds about right.  

Fri, 01/27/2012 - 15:24 | 2103461 Dr. Richard Head
Dr. Richard Head's picture

So THAT is what they mean by liquidity crisis.....

Fri, 01/27/2012 - 15:44 | 2103541 Dr. Engali
Dr. Engali's picture

Best comment yet.

Fri, 01/27/2012 - 16:21 | 2103658 FL_Conservative
FL_Conservative's picture

I'll drink to that!

Fri, 01/27/2012 - 16:46 | 2103754 redpill
redpill's picture


Fri, 01/27/2012 - 17:46 | 2103965 dwdollar
dwdollar's picture

Good until the last sentence. This:

"The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Helga’s bar."

Should be changed to something like this:

"The funds required for this bailout are taken from generations not yet born. The parents of those future generations don't get angry, but willingly take part in the infanticide for a chance to have their own seat at the handout feed trough, while they allow egotistical psychopathic morons to rule, close their eyes, finger their ears, and say 'Nah, nah, nah...'"

Fri, 01/27/2012 - 18:11 | 2104037 Ayn Rand
Ayn Rand's picture

Add after the first sentence....... and the funds were printed and dropped all over the town by Helicopter Ben and Aunty Angela.

Fri, 01/27/2012 - 17:58 | 2104012 kill switch
kill switch's picture

Explaining Modern Finance And Economics Using Booze And Broke Alcoholics


Now this is my kind of post,, Alcohol abuse only happens when you spill it....

Fri, 01/27/2012 - 17:23 | 2103895 HedgeAccordingly
HedgeAccordingly's picture


Fri, 01/27/2012 - 17:55 | 2104002 eatthebanksters
eatthebanksters's picture

And the bartender says," since we have the best customers in the world, Helga is buying a round for everyone...on the house!"

Fri, 01/27/2012 - 15:32 | 2103471 DaveyJones
DaveyJones's picture

Wow, the title is perfect - our economy policies are designed by broke alcoholics  

Fri, 01/27/2012 - 16:43 | 2103730 wisefool
wisefool's picture

Econ PhDs and LLM's tax? I wish these people would have partied more and manipulated less.

Fri, 01/27/2012 - 17:18 | 2103817 bigdumbnugly
bigdumbnugly's picture

from the foster brooks school of economics.  crazy gugenheimer was the prototype and art cashin and his buds are today's disciples.

secret membership password motto is: gin and bear it.

or just plain *hic*


Fri, 01/27/2012 - 17:57 | 2104010 eatthebanksters
eatthebanksters's picture

Davos = Drinkathon

Fri, 01/27/2012 - 16:35 | 2103696 candyman
candyman's picture

Abstaining from alcohol for two days is a sign of not having a drink problem, says adviser Sir Ian Gilmore, chair of the Alcohol Health Alliance, said having two "dry" days a week was "a very good indicator" of not being addicted to alcohol.     Comment --  they narrow this down to two hours, I'll be  in the clear !!!

Fri, 01/27/2012 - 18:02 | 2104023 blindfaith
blindfaith's picture

Free beer tomorrow.

Fri, 01/27/2012 - 15:18 | 2103433 Rincewind
Rincewind's picture

You know, that might be a good way for a lot sheeple to understand what has been going on.

Fri, 01/27/2012 - 15:34 | 2103493 LetThemEatRand
LetThemEatRand's picture

Except it misses a few very important points.  For example, the bank issued the loans without any concern that they would be paid back because the bank planned all along to securitize the loans and sell them to unsuspecting pension funds.   The bank KNEW the loans were no good, but the bankers took their bonuses on the front end when the loans were originated and again when they were securitized.  The bankers later go on TV and in print and explain that pension funds are really a stupid idea because they are all underfunded after the worthless securities they sold to the pension funds go bust.  The bankers will collect a fee for winding down the pension funds and forcing people to use 401Ks instead, and they will collect fees for starting the 401Ks.  They will then sell overinflated/constantly churned mutual funds to the 401K investor.  Again collecting fees.  Then when the mutual funds go bust, the bankers they will tell everyone they just need to work harder and retire later and they need to stop having an entitlement philosophy.   And then Rush Limbaugh will tell his listeners that higher taxes on the rich bankers will destroy the economy.   And on and on.

Fri, 01/27/2012 - 15:53 | 2103576 flattrader
flattrader's picture

No joke.  Screw this oversimplified nonsense.

Fri, 01/27/2012 - 18:01 | 2104020 blindfaith
blindfaith's picture

NO SOUP for you

Fri, 01/27/2012 - 19:21 | 2104220 greensnacks
greensnacks's picture

The Gallagher's always pay their debts!

Fri, 01/27/2012 - 16:48 | 2103766 francis_sawyer
francis_sawyer's picture


Bravo! But sorry, that's the version exclusively reserved for ZH'ers...

The rest still get the 'Humpty Dumpty' version...

Fri, 01/27/2012 - 17:31 | 2103920 flattrader
flattrader's picture

Sometimes I think the Tylers believe we all just fell off the cabbage truck coming into town.

Fri, 01/27/2012 - 17:36 | 2103946 francis_sawyer
francis_sawyer's picture

Well I don't know about the rest of you... But I'll vouch for the fact that I DID...


Fri, 01/27/2012 - 19:44 | 2104283 prains
prains's picture

you can make vodka from cabbage

Fri, 01/27/2012 - 22:53 | 2104773 UP Forester
UP Forester's picture

You can make vodka from sugar, yeast, acid blend and yeast nutrient.

Fri, 01/27/2012 - 16:49 | 2103774 Gully Foyle
Gully Foyle's picture


This case involves a once-profitable steel fabricating company, FAMM Steel, Inc. (“FAMM”), that fell on hard times while trying to expand its business.   The company defaulted on its loans, and it was shut down and had its assets liquidated in 2004.   Thereafter, it brought suit against Sovereign Bank (“Sovereign”), which provided the loans, claiming that the bank had caused its demise by forcing it to hire an incompetent financial manager who mismanaged the company's accounts and then engaging in a course of action that exacerbated the problem.   The company alleged the bank was liable under a slew of theories, including an instrumentality theory, breach of the implied covenant of good faith and fair dealings, breach of fiduciary duty, fraud, duress, and interference with advantageous business relations.

The district court granted the defendant bank summary judgment in a careful and well-reasoned opinion.  Gavin v. Sovereign Bank, No. 06-12314, 2008 WL 2622839 (D.Mass. June 30, 2008).   We affirm.   This is our first occasion to deal with the “instrumentality” theory of lender liability.

Fri, 01/27/2012 - 17:57 | 2104011 Xkwisetly Paneful
Xkwisetly Paneful's picture

BTW not one single thing novel here.

First day?

Going into default often results in the lender forcing some idiot down the throat of the borrower,

which then is summarily sued by the borrower for causing the problems.

When of course everyone knows the FAMM steel folks of the world over leveraged themselves to collect dividends, bonuses et al.




Fri, 01/27/2012 - 17:51 | 2103964 Xkwisetly Paneful
Xkwisetly Paneful's picture

Did you mean sovereign funds and not pension funds? Since sovereign funds were lined up double wide around the globe twice buying.

Not that it matters a ton since both are supposedly being operated by grown adults who are professional money managers.

No buyers=no sellerss=no market.

But keep giving those buyers chasing that extra steenth a free pass afterall they were entitled to it.

and not that it matters but the pension funds need no help from anyone to go bust using 8% actuarial assumptions to this day.  Who you going to blame that on?

of course it is the ZH rendition because at ZH countries don't need a banking system, military, food and fuel to operate but they do need 15,000 federal agencies doling out social benefits to the victims of the evil banksters-same victims who oddly enough wall papered their homes in plasmas and filled their driveways with escalades instead of investing in education or something actually useful.

Freest money period ever and yet somehow the borrower at lint like interest is the victim of a scheme to transfer wealth to the ultra rich. If that was the case what was it 30yrs ago when venture capital was 1% a month and 1/3rd of the net? Mortgages, car loans were 12% and credit cards were 30%. What was that considered?  How is it generations paid twice as much interest on mortgages as principal with of course the evil bankster getting his bonus and they actually paid the mortgage.





Fri, 01/27/2012 - 17:59 | 2104017 blindfaith
blindfaith's picture

actually, I believe the pension funds expect to be bailled out just like the banks...sorta like Italy after Greece.

Fri, 01/27/2012 - 18:04 | 2104018 LetThemEatRand
LetThemEatRand's picture

When you allow the wolves to feast on the sheep, they will do so.  The sheep do what sheep do.  The wolves do what wolves do.  The middle class has been gutted since Reagan took office and easy money (debt) was given to them to replace their wages.   People were too stupid to realize it.  The 1% got ultra wealthy moving all the good manufacturing jobs overseas and selling the cheap crap back to people who lost their good jobs and went to work at Walmart, by giving them loans that became or will eventually become the responsibility of the taxpayer when the bankers got/get bailed out.   The banker class got stuffed and bloated destroying the fundamental fabric of the country.  Apologize for them all you want.    The fact that the middle class was stupid and allowed it to happen doesn't excuse the behavior of the bankers and CEOs and politicians whom they bought and paid for.  Unless you are a follower of Rand in which case fuck them all let them starve, right?    Kind of like the grifter with his mark.  He sleeps like a baby at night knowing it was the sucker's own fault that he got rolled.

Fri, 01/27/2012 - 20:20 | 2104411 John_Coltrane
John_Coltrane's picture

If you want to understand the real origin of the debt problem and the relationship between banking cartels like the FED read, "the creature from Jeckyl Island".   That work describes the origin of The FED  in 1913 by Fabian Socialists whose symbol is the wolf in sheeps clothing.   But banking cartels orginate much earlier than that.    

And the origin of the public debt is solely unfunded, unauthorized wars like Vietnam (JBJ), Iraq (Bush) etc. combined by FDRs and LBJs social welfare "great society" programs to keep the unproductive masses docile.  The beginning of the solution is Ron Raul, and gold backed currency.  But only the beginning.  The real solution is individual responsibility, a bottom-up phenomena.

Fri, 01/27/2012 - 21:43 | 2104646 LetThemEatRand
LetThemEatRand's picture

Are you serious?  The bankers were Fabian Socialists?    They are fucking oligarch capitalists.  

Fri, 01/27/2012 - 22:08 | 2104694 DaveyJones
DaveyJones's picture

nice comment(s)

Sat, 01/28/2012 - 01:51 | 2105008 StychoKiller
StychoKiller's picture

You type that like "Fabian Socialists" and "oligarch capitalists" are mutually exclusive.  Check your premises.

Fri, 01/27/2012 - 21:41 | 2104637 FrankDrakman
FrankDrakman's picture

somehow the borrower at lint like interest is the victim of a scheme to transfer wealth to the ultra rich

Sure, now that I have a job, I'll just toddle down to my neighbourhood bank, and take out a loan at lint-like rates to pay off those 22% credit card bills I rang up when I was unemployed. Oh? The bank won't lend me any money? But they get to borrow at 0% from the Fed, and charge me 22%? What were you saying again?

Don't cry for me, btw; I only owe about $2,600, and I expect to clear it up soon. But I also wanted to start a business when I was unemployed, and I needed $5k for initial marketing expenses; after that the business would be self-financing. Think they would OK that loan either? Not a chance.

Fri, 01/27/2012 - 17:50 | 2103991 11b40
11b40's picture

It is virtually assurred that is you say anything negative about Rush Drugbo, there will be at least one other right-wing zombie around to give you a junk.  Is that where the label "junkie" comes from?

Fri, 01/27/2012 - 22:15 | 2104704 DaveyJones
DaveyJones's picture

it's almost as if they're criminals.

Now if only former federal prosecutors who specialized in this area thought so

and then all the bankers could possibly do is keep the press from giving these prosecutors camera time 

our president is right, our democracy keeps getting stronger

Fri, 01/27/2012 - 23:11 | 2104809 luckylogger
luckylogger's picture

This is the best comment I have seen on Zero hedge in years.......... you hit the nail on the head and I am in the industry and............ Congrats for saying it how it is. you deserve pariah status !!!!!

Good job !!!!!!!!!!!!!!!!!!!

Fri, 01/27/2012 - 16:32 | 2103690 BGO
BGO's picture

The scenario would have been more realistic if the bankers colluded with insurance companies to create swaps that allowed bankers to bet against the same crap they were selling to their customers.

Fri, 01/27/2012 - 15:20 | 2103438 Gully Foyle
Gully Foyle's picture


Helga then opens a rooming house for Alcoholics collecting Social Security. She provides them booze laced with poison. Which she charges a premium for.

Once they die Helga grinds up the bodies for pig food and continues to collect the benefit checks.

Eventually Helga buys a small pig farm and three more boarding houses.

Fri, 01/27/2012 - 15:38 | 2103511 francis_sawyer
francis_sawyer's picture

"Soylent PINK"

Fri, 01/27/2012 - 17:31 | 2103919 el Gallinazo
el Gallinazo's picture

Soylent Oink!

Fri, 01/27/2012 - 15:43 | 2103533 flacon
flacon's picture

Soylent Green is people!

Sat, 01/28/2012 - 01:58 | 2105021 StychoKiller
Fri, 01/27/2012 - 15:39 | 2103519 non_anon
non_anon's picture


Fri, 01/27/2012 - 16:27 | 2103674 gravedestruction
gravedestruction's picture

"Where is that bar?"

I think it's somewhere in hell, may have been there in 2005 three years before the 2008 bar tabs started.

Fri, 01/27/2012 - 16:39 | 2103710 vast-dom
vast-dom's picture

try dating a lying whore special k-shooting pill popping alchoholic for a few months and the above analogy is that much more freightening... the bottomless pit of disease mendacity and eternal excuses...

Fri, 01/27/2012 - 16:43 | 2103736 economics1996
economics1996's picture

When you are young head #2 rules the day.

Fri, 01/27/2012 - 17:19 | 2103880 vast-dom
vast-dom's picture

precisely! pure head #2 nonsense!

Fri, 01/27/2012 - 17:28 | 2103905 Anglo Hondo
Anglo Hondo's picture

Hey, v-d, it seems you may have met my third ex-wife there.


Fri, 01/27/2012 - 18:54 | 2104148 vast-dom
vast-dom's picture

did the vampire whore almost kill you with her malignant BPD narcissism? if so, then we should both be grateful we're still alive with enough plasma left to even post on here...

Sun, 01/29/2012 - 01:50 | 2106812 Freddie
Freddie's picture

Helga sounds like the muslim that the Democrats bow to.

Fri, 01/27/2012 - 15:14 | 2103405 LongSoupLine
LongSoupLine's picture



On that note...CNBS (read: full time bartender), is foaming at the mouth on the Facebook/Goldman IPO announcement and is implying this is, "what can save the market."

I've seen complete steaming horseshit before, but this is truly the mother of all fecal loads!

Fri, 01/27/2012 - 15:21 | 2103447 tickhound
tickhound's picture


Signals medium term market top?  MS ain't movin'...

Fri, 01/27/2012 - 16:07 | 2103611 SheepDog-One
SheepDog-One's picture

Think of all the crop production from FarmVille! We're saved!

Fri, 01/27/2012 - 16:15 | 2103635 LongSoupLine
LongSoupLine's picture



Now, if the Fed just can get Farmville to grow iPads then Dudley's master plan will be complete!

Fri, 01/27/2012 - 16:24 | 2103669 tickhound
tickhound's picture

Has that been baked in?  ;)

Sat, 01/28/2012 - 11:57 | 2105414 I did it by Occident
I did it by Occident's picture

Farmville= FEMA virtual labor camps.  Why build camps when you can imprison the unthinking masses in their own houses? 

Sun, 01/29/2012 - 01:52 | 2106818 Freddie
Freddie's picture


Just leave them in their repo'ed homes.  The sheep are easily controllled by TV.  ALL TV is shit and only losers/serfs watch it. 

Fri, 01/27/2012 - 18:39 | 2104112 lotsoffun
lotsoffun's picture

i saw something on MSM 2 months ago about 'post your whole life on facebook'.  i shut my 'account' down that day.  it was a nice way to see news from time to time from other friends who posted something every few weeks or so.  but my whole life?  your whole life?  get a life?


Sat, 01/28/2012 - 12:00 | 2105416 I did it by Occident
I did it by Occident's picture

maybe it is the FB equivalent of the heisenberg uncertainty principle.  The more of your life FB has, the less life you have and vice versa. 


Fri, 01/27/2012 - 15:15 | 2103412 Turkey
Turkey's picture

This is crap and every ZeroHedge reader should know it.  Dissappointing to see a garbage spam mail chain get posted as a real post here on ZeroHedge.

Fri, 01/27/2012 - 15:20 | 2103442 Sabibaby
Sabibaby's picture

It's an allegory. Would you rather car dealership instead of bar?

Fri, 01/27/2012 - 15:24 | 2103464 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

How about Helga starts up a whorehouse next to her bar.  Make it rain Helga!

Fri, 01/27/2012 - 15:32 | 2103487 francis_sawyer
francis_sawyer's picture

a word of caution... Asking someone named HELGA to "make it rain", ain't always a good idea if you know what I'm saying...

Fri, 01/27/2012 - 15:45 | 2103543 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I can handle whatever she makes happen ;)

Fri, 01/27/2012 - 16:03 | 2103598 francis_sawyer
francis_sawyer's picture

THAT's the spirit!

Fri, 01/27/2012 - 16:26 | 2103673 OutLookingIn
OutLookingIn's picture

Except it just may be 'Golden Showers!'

Only this gold is ultra-liquid! If you get my drift?

Fri, 01/27/2012 - 16:46 | 2103752 economics1996
economics1996's picture
Golden Shower
  The act of urinating on another person, usually for sexual gratification, or as a way of humiliation. More common than a Golden bath, where, during anal sex, one partner urinates into the colon of the other. Do you need me to give you a golden bath?
Fri, 01/27/2012 - 16:52 | 2103788 francis_sawyer
francis_sawyer's picture

@Out Looking In

My free advice... Consider the HELGA & BROCK LESNAR variables... Then... CHOOSE WISELY...

Fri, 01/27/2012 - 21:47 | 2104654 FrankDrakman
FrankDrakman's picture

Will you lick the santorum afterwards?

Fri, 01/27/2012 - 16:52 | 2103790 Turkey
Turkey's picture

Here's a better one:


The management of a bank decides they are tired of doing actual work, and worse, they are making money, but not “fuck you money”, and they really want to be making “fuck you money.”  While they want more money, they certainly don’ t want to spend any more hours in the office.  So they hire 50 recent ’04 grads and tell them “we’re a bank, we can make money, our core biz is borrowing at 1% and lending at 5%.  Things are pretty sweet, but alas our homes in Turks and Caicos aren’t big enough, go figure out how we can lend a trillion dollars and you too can have large homes in Turks and Caicos.”  The enlightened 22 year olds crawl across the globe, looking for people, countries, and businesses to lend money to, but alas the financial industry has been around for a while, and their aren’t easy, traditional, legal ways to lend a trillion dollars.  They lend a couple million to some small businesses here and there, a couple million in mortgages, and a couple billion to some countries.  Still, they know this is not enough, there is competition even in lending, and the whole due diligence process is hard work.

After a month the newlygrads report back to management.  They have leant 20B and are feeling alright about themselves.   They aren’t ready for the reaming they receive.  Management screams “which one of you little ninnies wants to get fired first, we said lend a trillion dollars you pansies, how hard can it be?  Now get out there and lend a trillion dollars.  Jesus you’d think we are asking them to build a house or something.” /swigs some Blue Label.

Well after this chastising the class of ‘04 decides they are not coming back until they lend 1T.   They walk down to Stone St. together to drink away their problems.  How on earth are they going to lend a trillion dollars?  After a couple rounds of Patron and Johnny Walker they are properly sauced, slapping asses, all around having a good time.  Then, in a moment that can only be described as brilliant insight, one of young lads says…

 “Guys, wait guys I got it.  I just figured it out.  What if we just started giving the money away?” 

“What do you mean giving the money away?” Asks his friend. 

“I mean, just give that shite away.  We’ll set up a stand in front of Grand Central, and give anyone who provides a name and address $10,000.” 

“That’s crazy dude, we can’t do that, we’ll go bankrupt.” 

“Don’t worry man, I figured that out too.  We’ll just sell the loans.” 

“Wait, I don’t understand, I thought you said give the money away.” 

“Well yea sort of, I misspoke.  We’ll take a name and address along with a promise that the loan will be paid back in four years, so it’ll be a loan, but we’ll just do them as fast as we can, simply taking a name and calling it a day.” 

“Who will buy crap loans?” His friend asks.

“Whoever we tell too.  We’ll pay Moody’s or S&P to slap a triple A rating on it, and no one will think twice about it.  After all, we’re BIG REPUTABLE BANK."

The friend pauses for a moment to think.  “So you’re saying just give away as much money as possible, document it as a loan without any regard to whom we are giving money to, slap a triple A rating on them, and then sell em?” 


“It’s fucking brilliant, let’s do it.”

So they buy a plastic picnic bench and set it up outside of Grand Central, with a sign that says “$10,000 loans, no questions asked.”  At first no one stops by, it looks like an obvious scam.  Then one fellow takes the bait.  

“Alright guys what are you doing?”  

“Want ten grand?”  

“Sure, what do I have to do?”  

“Just sign your name and you’re good.”

The fellow signs his name, and they hand him $10,000 in cash. 

“Holy shit you kids are nuts!” He exclaims, before running off to tell everyone he knows.  Some bystanders see the fellow get handed 10k in cash, and they come over to the bench.

To make a long story short, within a month they sign up 100,000 people.  The “give away money without bothering to check a credit score” program is so successful that they open up offices all over the country.  One year later they have leant $10k to one hundred million people.  They hit their trillion.

Celebrations are had at the bank.  Management says “Holy shit you guys did it.  What did you do?”  The class of ’04 explains, and quickly the bank realizes that the task is not yet complete.  “Shit guys, we’ve got to get this garbage off our books.”  The class of ’04 naively asks “So we don’t take the loss, right?”  “Hahaha” Management laughs.   “Well yea that too, but more importantly so we can do it again!”

The bank goes to S&P and says “Guys we’ll pay you $10M to rate this as triple A”.  “Make it 20.” “Done.”

Having received a AAA rating on the loans, the bank then stops at the local teachers retirement fund and says “You all want to buy some triple A rated bonds?  They are as safe as treasuries but slightly cheaper.”  The teachers retirement fund can only invest in certain safe products, and they rely, perhaps too heavily, on the “advice” of the rating agencies.  They buy the securities.

Now four years comes around and low and behold not all of the people who borrowed 10k with a signature can pay it back.  Payments on the loans are worse than would be expected from a general cross section of the population.  Consultants are paid $2M to write a report concluding that if you give away money in return of a signature, the recipients are less likely to repay the loan than if they go through a formal loan application process.  Additionally a good portion of the recipients would have been rejected if a proper application/due diligence process was followed, on those recipients actually repaid the loan at the expected unacceptable rate.  They performed exactly as their unexamined credit score would indicate, poorly.

The End

Sat, 01/28/2012 - 16:53 | 2105920 HungrySeagull
HungrySeagull's picture

You forgot robo calling and marked ad marketing to those names and addresses as a revenue stream.

I absolutely love these little stories. How is it 4 years of Business Degree gets reduced to such simple shit story?

They also left out the part in which Helga bypasses her EX- Suppliers and starts making own beer in the basement.

We have carted a drunk or two home once a twice. Usually for a damn good reason.


And finally here is my last gift to the Helga Story.


"The Customers were suffering effects of drinking and were dying in the Hospitals. Helga was forced to establish a steady stream of donations to well known charities to tend to these ills. This way the People are kept happy while the Bar is safe from looters and smash/grab riots.

Helga also opens hospice and treatment centers so that the revenue from the Beloved and the angry families demanding that the young drunk sober up will be milked for every possible penny.


Helga gives a special GPS coordinates to the military vets and active duty drinkers so that they can keep going at the new place minus the VA money of course.


Finally Helga contemplates marriage to a wrinkly rich fuck who cannot do much in bed, but uses sperm donors or adopts the babies from the whorehouse and raises them to be future little Helgas, any boys as a result of these unions will be made Bankers so that nothing will be disturbed.

Those who are idiots will be deemed useful and given tasks in very powerful places. These tasks are oriented towards keeping Helga's world rolling without too much halts.

Fri, 01/27/2012 - 15:28 | 2103478 francis_sawyer
francis_sawyer's picture

"Friday Humor" starts at 2PM... What's wrong with that?

It's ALWAYS "Happy Hour" at any given moment somewhere in the world!

Fri, 01/27/2012 - 15:20 | 2103416 BLOTTO
BLOTTO's picture

Alchol - yes - the faster acting of the consumed poisons...

Thats what they want us - dumbed down even more - and fast.

BTW, Im not trying to say a bit isnt good, but they want us hooked, drunk and poisoned.


Fri, 01/27/2012 - 15:21 | 2103446 Gully Foyle
Gully Foyle's picture


The Devil can only tempt.

Fri, 01/27/2012 - 15:53 | 2103577 Swarmee
Swarmee's picture

+1 Irony for such statements coming from a user named 'Blotto'. Bravo.

Sat, 01/28/2012 - 11:51 | 2105410 BLOTTO
BLOTTO's picture

+1 Swarmee


Fri, 01/27/2012 - 15:16 | 2103417 GeneMarchbanks
GeneMarchbanks's picture

'The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers(emphasis mine) who have never been in Helga’s bar.'

Solution: start drinkin' to keep Helga in pseudo-business.


Fri, 01/27/2012 - 16:01 | 2103594 Dr. Richard Head
Dr. Richard Head's picture

I am going to start a warehouse line of credit to sell on the secondary market for Helga. We can call them HELOC - Heineken Equity Line of Credit.  We can base the collateral on the deposit for the bottles, so I will have to set up shop in MI or CA.

Sat, 01/28/2012 - 16:56 | 2105931 HungrySeagull
HungrySeagull's picture

And I will establish a trucking outfit to run your drinks to Helga. I just need those with a IQ of 50, obeys commands well and is able to lift a pallet of beer.

Rail spurs will also be run to your production factory while "Buffet" Express via Private Car wines and dines said Benefactor into oblivion and dreams of much heaven on earth.

Course in the morning will be a rather rough time, but we will worry about that later.

Fri, 01/27/2012 - 15:16 | 2103418 The Axe
The Axe's picture

oh.....I agree  I want to own a 100 billion dollar company that can't make money...dislike...

Fri, 01/27/2012 - 15:18 | 2103430 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You won't be buying the Facebook IPO then, I take it?

Fri, 01/27/2012 - 15:33 | 2103496 francis_sawyer
francis_sawyer's picture

& Somewhere... The employees of Chinese alcohol distilleries are jumping off of the tops of buildings...

Fri, 01/27/2012 - 15:16 | 2103420 WonderDawg
WonderDawg's picture

Smells like a business opportunity. Or something.

Fri, 01/27/2012 - 15:17 | 2103423 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Can I borrow a dollar?

Fri, 01/27/2012 - 15:18 | 2103427 Peeta Mellark
Peeta Mellark's picture

I will gladly pay you later with my SNAP card for a drink today

Fri, 01/27/2012 - 15:18 | 2103429 yogibear
yogibear's picture

Bernanke and the federal Reserve bankers keep on supplying the out of control US fiscal irresponsibility.

Other countries need to take away the bottle (Reserve currency) from the US and fast. 

Before it destroys everyone.


Fri, 01/27/2012 - 15:21 | 2103450 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What is that one thing Bernanke and all economists write about?  Moral Hazard.  That's it.  Funny the psuedo science knows where the problems lie but they only discuss them when it is to their advantage.

Fri, 01/27/2012 - 16:00 | 2103590 XitSam
XitSam's picture

Did Bernanke write about moral hazard? Just goes to show, don't listen to what they say, watch what they do.

Fri, 01/27/2012 - 16:22 | 2103664 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Universities across America teach his books.  Moral hazard is thouroughly explained.

Principles of Microeconomics

Authors- Robert Frank and Ben Bernanke:

Sat, 01/28/2012 - 15:22 | 2105789 Matt
Matt's picture

Would it be fair to say he is one of the Dukes of [Moral] Hazard?

Fri, 01/27/2012 - 16:19 | 2103649 Bam_Man
Bam_Man's picture

Ever ask yourself why the US needs to have a military that is several times stronger than the rest of the world's combined?

If/when any other country(s) try to "take away the bottle" and you will have your answer.

Fri, 01/27/2012 - 15:20 | 2103441 SillySalesmanQu...
SillySalesmanQuestion's picture

It should be the duty of every ZH reader to print off at least 1000 copies of this post, hand them out to every sheepie you know, and go to every bar and tavern, pass these out and have a beer...

Fri, 01/27/2012 - 15:22 | 2103457 Gully Foyle
Gully Foyle's picture



You think anyone will give a shit?

Fri, 01/27/2012 - 15:38 | 2103516 RichardENixon
RichardENixon's picture

Most people I know would probably say something like "Is there another bar like Helga's opening anywhere around here?"

Fri, 01/27/2012 - 15:38 | 2103517 SillySalesmanQu...
SillySalesmanQuestion's picture

Sorry...should have hit the sarcasm button. 

Fri, 01/27/2012 - 15:20 | 2103443 fonzannoon
fonzannoon's picture

How does mark to market accounting and shadow inventory fit in here?

Fri, 01/27/2012 - 15:21 | 2103448 AnAnonymous
AnAnonymous's picture

Unsurprisingly, one actor is missing.

The person who has taken the loss and enabled the scheme, the booze provider.

Fri, 01/27/2012 - 15:26 | 2103469 WonderDawg
WonderDawg's picture

Not missing, it just requires reading comprehension skills:

The suppliers of Helga’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers. Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.


Fri, 01/27/2012 - 16:51 | 2103783 Gully Foyle
Gully Foyle's picture


Norway was once called the "Snowshoe Capital of the World" because of the many snowshoes manufactured here. In 1906, Walter Tubbs established the Tubbs Snowshoe Company to produce ash snowshoes, skis, sleds and furniture. The firm made 70% of the snowshoes ordered by the U.S. government during World War II, and also supplied the polar expeditions of Byrd and Peary.[6] In the 1940s, the Tubbs Company moved to Vermont, and in 2004, it was bought by K2 Sports. The snowshoes are now made at a factory in Guangzhou, China.[7] In 1997, the New Balance Shoe Company built a new manufacturing facility at Norway. The C. B. Cummings & Son Company, founded in 1860 to make dowels and other wood products, closed and auctioned its downtown plant in 2001 because of competition from China. In addition, the business had lost customers when furniture factories in the Carolinas shut down.[8]

Fri, 01/27/2012 - 16:49 | 2103772 economics1996
economics1996's picture


Fri, 01/27/2012 - 15:29 | 2103472 Everybodys All ...
Everybodys All American's picture

Bernanke is hammered. BTW the author is trying to convey a debt spiral is inevitable.

Fri, 01/27/2012 - 15:30 | 2103483 JW n FL
JW n FL's picture




Fri, 01/27/2012 - 15:31 | 2103486 Global Hunter
Global Hunter's picture

That headline is right in my feels timely, I feel and understand it on an intimate time has come!!!!

Fri, 01/27/2012 - 15:32 | 2103490 alien-IQ
alien-IQ's picture

The only word missing from this article should stand alone and at the end: REPEAT.

Fri, 01/27/2012 - 15:36 | 2103505 francis_sawyer
francis_sawyer's picture

Well... THAT... & the fact that almost all of the alcohol has been REHYPOTHECATED...

Fri, 01/27/2012 - 15:47 | 2103551 flacon
flacon's picture

Rehypothecated alchol is collected from the urnals and sold to the beer factory. 

Fri, 01/27/2012 - 15:54 | 2103579 alien-IQ
alien-IQ's picture

I believe the technical name for that is "Budweiser".

Fri, 01/27/2012 - 16:03 | 2103601 Dr. Richard Head
Dr. Richard Head's picture

Call me an alchemist, because I can turn beer in to urine at a moments notice.  I'm like Bernanke.

Fri, 01/27/2012 - 16:12 | 2103622 francis_sawyer
francis_sawyer's picture

I believe the technical name for that is "Budweiser".


Sat, 01/28/2012 - 16:58 | 2105938 HungrySeagull
HungrySeagull's picture

Any excess is siphioned off to be sent to Ethanol for additional revenue.

Fri, 01/27/2012 - 15:34 | 2103498 non_anon
non_anon's picture

thanks for reminding me to thave my WT101 and coke

Fri, 01/27/2012 - 15:36 | 2103506 Money never sleeps
Money never sleeps's picture

Holy shit, Armada Markets!

Fri, 01/27/2012 - 15:37 | 2103507 rsnoble
rsnoble's picture

Finally. An article written especially for me. Thanks!

Fri, 01/27/2012 - 15:40 | 2103520 Dr. Engali
Dr. Engali's picture

You forgot about the part where  Helga's patrons continue to occupy the bar free of charge while at the same time going off to the nearest Apple orchard and buying hard cider with the government assistance program, who in the meant time ,is issuing future labor bonds and selling them to the Chinese.

Fri, 01/27/2012 - 15:41 | 2103525 Convolved Man
Convolved Man's picture

Moral of this tale ...

Accept only gold in exchange for alcohol, not promissory notes.

Fri, 01/27/2012 - 15:43 | 2103535 The Deleuzian
The Deleuzian's picture

we're going to get one more deflationary sell everything downdraft...Then the money's coming out!!!

Fri, 01/27/2012 - 15:44 | 2103540 RobotTrader
RobotTrader's picture

Anybody still long TZA, FAZ, or TVIX?


My condolences........

Fri, 01/27/2012 - 15:47 | 2103548 Dr. Engali
Dr. Engali's picture

No but I do own gold ,silver,and lead. At least I did until an unfortunate smelting accident.

Fri, 01/27/2012 - 16:27 | 2103675 Theosebes Goodfellow
Theosebes Goodfellow's picture

But you're still a "svinger", Herr Doktor? You sound toit, "toit like a svinger". ;-) Happy Friday....

Fri, 01/27/2012 - 16:35 | 2103700 Dr. Engali
Dr. Engali's picture

Happy Friday :->

Fri, 01/27/2012 - 15:48 | 2103556 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Anybody still short gold?


My condolences......

Fri, 01/27/2012 - 16:17 | 2103639 tickhound
tickhound's picture

Dude, you're really reachin' with the irrelevant posts... Stop trying so hard.

Fri, 01/27/2012 - 15:48 | 2103552 RobotTrader
RobotTrader's picture

"Presented Without Comment"


Chart of DRV

Who said Real Estate was going to crash and burn?


Fri, 01/27/2012 - 15:50 | 2103567 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Talk to anyone trying to sell property over the last few years.

Fri, 01/27/2012 - 16:16 | 2103634 francis_sawyer
francis_sawyer's picture

Actually... JUST DID sell some real estate...

To a FEDERAL EMPLOYEE working "inside" the Capital Beltway... (the only type that even had a chance to qualify)...


Sat, 01/28/2012 - 16:59 | 2105940 HungrySeagull
HungrySeagull's picture

We managed a few nibbles here and there.

Fishing real estate is easy... if you wait long enough they will nibble on the hook.

Fri, 01/27/2012 - 16:17 | 2103641 LawsofPhysics
LawsofPhysics's picture

Ah robo, if you were only as reliable as the 3:15 ramp in equities.  Your "rear view mirror" calls are always spot on though.

Fri, 01/27/2012 - 15:58 | 2103583 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

The analogy works until the collection of the debts, because the drunks are in reality all back stopped by the government ...

No one is going to go bankrupt.

Fri, 01/27/2012 - 16:00 | 2103592 kralizec
kralizec's picture

Anybody accepting uncollectable debts in return for items of real value perhaps deserves the beating they'll take, as are the jackasses that supply this stupid enterprise!  But in the real world progressive trash intervenes and floats stimulus funds to this failing operation because Helga is moron who makes campaign contributions to the pimp in the White House, thus postponing Judgment Day and giving the pimp another kickback!

Helga's bar should have been shut down as soon as she floated this idea to the bankers!  But the bankers have no risk aversion thanks to fricken Big Government whores all too willing to skew the game so that this bullshit is allowed to thrive!

Helga, the pimp, the lenders, the regulators and the congresscritters feeding off this crap should all have their asses kicked! 



Fri, 01/27/2012 - 16:00 | 2103593 The Deleuzian
The Deleuzian's picture

Robo...The RE market has crashed...Is crashing...And will crash for some time going forward...Who cares if some ETF says otherwise??  The more they mess with it...Try to sucker people in...The longer it takes for the RE market to bottom...It hasn't bottomed yet...

Fri, 01/27/2012 - 16:22 | 2103662 SheepDog-One
SheepDog-One's picture

Robo likes playing 'peek-a-boo' with himself like a little baby...well whatever floats his boat I guess.

Too bad about his unfortunate top-call on gold at $900 where he told everyone to dump it he'll never live that one down.

Fri, 01/27/2012 - 16:07 | 2103610 Let The Wurlitz...
Let The Wurlitzer Play's picture

This is acarry.  It sounds like one of my experiences back in college - except there was no bailout.



Fri, 01/27/2012 - 16:15 | 2103629 spanish inquisition
spanish inquisition's picture

We are still in party phase... Roll out another barrel!!!!

Everyone! E I E I EI O

Fri, 01/27/2012 - 16:18 | 2103643 francis_sawyer
francis_sawyer's picture

My only problem with ROLL OUT THE BARREL is that it conjures up memories of "Groundhog Day"...

Sat, 01/28/2012 - 17:01 | 2105943 HungrySeagull
HungrySeagull's picture

You are a tad late to the party, the Keg is now required to be registered to a legal Adult who will certify where it will be used and a Geo tracker attached to the said Keg will keep the Authorities informed.

The Geo Tracker is a intended pun.


Legal adults are easy to find. Just send a Hard body or a Hottie and have them ready to sign.

Fri, 01/27/2012 - 16:19 | 2103647 rsnoble
rsnoble's picture

Don't look now but we still have over 30 minutes left to go all green. The .5% gdp has been digested and the dip has been bought. Gee, imagine that.  Fkn madhouse.

Fri, 01/27/2012 - 16:19 | 2103651 williambanzai7
williambanzai7's picture

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. 

Inside the small boat were several large yellow fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them. 

The Mexican replied, "Only a little while."

The American then asked, "Why didn't you stay out longer and catch more fish?"

The Mexican said, "With this I have more than enough to support my family's needs."

The American then asked, "But what do you do with the rest of your time?"

The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life."

The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing; and with the proceeds, buy a bigger boat: With the proceeds from the bigger boat you could buy several boats. Eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor; eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then Los Angeles and eventually New York where you will run your ever-expanding enterprise."

The Mexican fisherman asked, "But, how long will this all take?"

To which the American replied, "15 to 20 years."

"But what then?" asked the Mexican.

The American laughed and said that's the best part. "When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions."

"Millions?...Then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

Fri, 01/27/2012 - 16:27 | 2103676 Dr. Richard Head
Dr. Richard Head's picture

Indian Chief ‘Two Eagles’ was asked by a white U.S. government official, “You have observed the white man for 90 years. You’ve seen his wars and his technological advances. You’ve seen his progress and the damage he’s done.”

The Chief nodded in agreement.

The official continued, “Considering all these events, in your opinion where did the white man go wrong?”

The Chief stared at the government official and then replied, “When white man find land, Indians running it, no taxes, no debt, plenty buffalo, plenty beaver, clean water. Women did all the work, Medicine man free. Indian man spend all day hunting and fishing; all night having sex.”

Then the chief leaned back and smiled, “Only white man dumb enough to think he could improve system like that.”  



Fri, 01/27/2012 - 16:35 | 2103697 tmosley
tmosley's picture

Also, everyone murdered and stole from each other, and lived to 35 if lucky.


Fri, 01/27/2012 - 16:38 | 2103715 the grateful un...
the grateful unemployed's picture

yes and thats' the system the white man has trouble running. so why not try investment banking?

Fri, 01/27/2012 - 16:52 | 2103794 wisefool
wisefool's picture

Or an 85,000 page tax code in a country where obesity is one of the biggest problems for those in poverty. That, and the fact there might only be 3 dual core computers, 2 Teeves and a DVD player per 30 students in an elementary school classroom.

Fri, 01/27/2012 - 17:35 | 2103942 lotsoffun
lotsoffun's picture

mr. wisefool - not sure your point.  mr. einstein made some great progress with books, pencil and paper.  as did many others?  are you implying a shortage of tv's?  i personally would dump all electronics in early schools and teach reading, writing and arithmetic.  along with how to co-operate and live with other people.


Fri, 01/27/2012 - 18:06 | 2104029 wisefool
wisefool's picture

I am a big fan of the two eagles story, it was countered with "people stole from each other constantly and died at 35"

The tax code in this country is stealing from people, and killing people.

  • Either redistributing wealth between living people. And usually not between the "rich" and the "poor"
  • Not taxing enough to maintain a sustainible credit rating/financial soveriegnty.
  • Stealing from our children.
  • Taxing too much, such that we can ostensibly afford to police the world, yet we never suffer from signfigant war wearyness (hint: those $600 checks GWB sent out, weren't about economic stimulus ... and there is a reason 51% of the population does not pay federal tax ....)
  • ... And it is actually not a legitimate law because it it too complex for a human being to follow.
  • Where is Timmy! (spending your tax dollars on IMF bailouts of EUROPE, Cheif Two Eagle laugh hard!)

* I am not against taxation. I am not against military action when justified. I am against this absurd, broken machine that we have now that is doing more harm than good on many different levels. The point about obesity and computers is there 'cause the injuns didn't have those either.


Fri, 01/27/2012 - 18:32 | 2104093 lotsoffun
lotsoffun's picture

well then we are in agreement (somebody on this post) because the fact is - tv's and cars (and burgers and softdrinks) just keep getting bigger in this country - and the people keep getting fatter and dumber.


Sat, 01/28/2012 - 17:04 | 2105951 HungrySeagull
HungrySeagull's picture

Well take away everything and go back to one room school houses right there in each subdivision. That way no buses, no fuel, no cameras, no extra personel needed.

Fri, 01/27/2012 - 17:43 | 2103971 francis_sawyer
francis_sawyer's picture

yes and thats' the system the white man has trouble running. so why not try investment banking?

Damn "whitey"...

Now think if all blacks ran investment banking and all whites were NBA stars... Now count your blessings & keep quiet...

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