posted on Nov, 5 2009 @ 12:50 PM
I know ATSers hate it when people repost emails, but I couldn't help sharing the simplicity of these two examples! I hope you all like it, and it
provides some good discussion!
An economics teacher made a statement that he had never failed a single student before, but had once failed an entire class.
That class had insisted that President Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The teacher then said, "OK, we will have an experiment in this class on Obama's plan".
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride
too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the teacher told them that socialism would also ultimately fail because when the reward is great, the effort
to succeed is great,
but when government takes all the reward away, no one will try or want to succeed.
Could not be any simpler than that.
Heidi is the proprietor of a bar in Detroit . 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 new marketing
plan that allows her customers to drink now, but pay later. She keeps track
of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around about Heidi's "drink now pay later" marketing strategy and,
as a result, increasing numbers of customers flood into Heidi's bar. Soon she
has the largest sales volume for any bar in Detroit .
By providing her customers' freedom from immediate payment demands, Heidi
gets no resistance when, at regular intervals, she substantially increases her
prices for wine and beer, the most consumed beverages. Consequently, Heidi'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 Heidi'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 transform these customer
loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are
then bundled and traded on international security markets. Naive investors don't
really understand that the securities being sold to them as AAA secured bonds
are really the 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 are still 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 Heidi's bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed
alcoholics they cannot pay back their drinking debts. Since, Heidi cannot fulfill
her loan obligations she is forced into bankruptcy. The bar closes and the eleven
employees lose their jobs.
Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%.
The collapsed bond asset value destroys the banks liquidity and prevents it from
issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Heidi's bar had granted her generous payment extensions and
had invested their firms' pension funds in the various 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 multi-billion dollar no-strings attached cash infusion
from the Government.
The funds required for this bailout are obtained by new taxes levied on employed,
Now, do you understand?