The financial crisis explained in simple terms

The financial crisis explained in simple terms: Heidi is the proprietor of a bar in Berlin. In order to increase sales, shedecides to allow her loyal customers - most of whom are unemployedalcoholics - to drink now but pay later. She keeps track of the drinksconsumed on a ledger (thereby granting the customers loans).Word gets around and as a result increasing numbers of customers flood intoHeidi's bar.Taking advantage of her customers' freedom from immediate paymentconstraints, Heidi increases her prices for wine and beer, the most-consumedbeverages. Her sales volume increases massively.A young and dynamic customer service consultant at the local bank recognizesthese customer debts as valuable future assets and increases Heidi'sborrowing limit.He sees no reason for undue concern since he has the debts of the alcoholicsas collateral.At the bank's corporate headquarters, expert bankers transform thesecustomer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securitiesare then traded on markets worldwide. No one really understands what theseabbreviations mean and how the securities are guaranteed.Nevertheless, as their prices continuously climb, the securities becometop-selling items.One day, although the prices are still climbing, a risk manager(subsequently of course fired due his negativity) of the bank decides thatslowly the time has come to demand payment of the debts incurred by thedrinkers at Heidi's bar.However they cannot pay back the debts.Heidi cannot fulfil her loan obligations and claims bankruptcy.DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better,stabilizing in price after dropping by 80 %.The suppliers of Heidi's bar, having granted her generous payment due datesand having invested in the securities are faced with a new situation.Her wine supplier claims bankruptcy, her beer supplier is taken over by acompetitor.The bank is saved by the Government following dramatic round-the-clockconsultations by leaders from the governing political parties.The funds required for this purpose are obtained by a tax levied against thenon-drinkers.Finally an explanation I understand . . .