Finance geeks would tell you that the current financial crisis began when investors lost confidence in the value of securitized mortgages in the US resulting in a liquidity crisis that, in turn, caused a substantial injection into financial markets by the US Federal Reserve. They'll talk about mortgages, sub primes, leveraging, shadow banking, swaps and all those things that are part of their holy argot!
Now, a story in English.
"I was the proprietor of a bar(theka?) in Bawana. In order to increase sales, I decided to allow my loyal customers(and friends!) - most of whom were unemployed(as of then) alcoholics - to drink then, but pay later. I kept track of the drinks consumed on a ledger (thereby granting the customers loans). Word got around and as a result, the footfall at the Boulevard of thy 'Highness' went up just as the madness is at the Santiago Bernabeu. Taking advantage of my customers’ freedom from immediate payment constraints, I increased my prices for vodka and beer, the most-consumed beverages. My sales volumes(and of innumerable bellies) increased massively.
A young and dynamic customer service consultant at the local bank(Students' Bank acknowledging Inebriation) recognised these customer debts(and no the customers) as valuable future assets and increased my borrowing limit. He saw no reason for undue concern since he had the debts of the alcoholics(and their impending pay packets, which were presumably 'high') as collateral.
At the bank’s corporate headquarters, expert bankers transformed these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities were then traded on markets worldwide. No one really understood what these abbreviations meant and how the securities were guaranteed. Nevertheless, as their prices continuously climbed, the securities became top-selling items.
One day, although the prices were still climbing, a risk manager (subsequently of course fired due to his ubiquitous negativity) of the bank decided that slowly the time had come to demand payment of the debts incurred by the drinkers at my bar. However, they could not pay back the debts. I could not fulfill my loan obligations and claimed bankruptcy. DRINKBOND and ALKBOND dropped in price by 95%. PUKEBOND performed better, stabilizing in price after dropping by 80 %(for reasons unknown to all concerned).
The suppliers of my bar, having granted me generous payment due dates and having invested in the securities(if you could call them that) were faced with a new situation. My vodka supplier claimed bankruptcy, my beer supplier was taken over by a competitor.
In the meanwhile, Changu and Mangu, next door neighbours in the basti and owners of competing bars had also thought that this way of conjuring money - where there existed none - had the nascent ability to propel them to 'ultra-richdom'. That the tables had turned on them was all over bar the shouting. They, just like yours' truly, also got beat by the greed game.
The bank was saved by the Government following dramatic round-the-clock consultations by leaders(again, if you can call them that) from the governing political parties. The funds required for this purpose were obtained by a tax levied on the non-drinkers."
Yeah, let's keep the game simple!
