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Month: March 2009

Financial crisis and bonuses

A friend send me the following story recently, explaining the financial crisis in a way that everyone can understand. John is the proprietor of a bar in Surfers Paradise. In order to increase sales, he decides to allow his loyal customers, most of whom are unemployed alcoholics, to drink now but pay later. He keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of unemployed alcoholics flood into John’s bar. Taking advantage of his customers’ freedom from immediate payment constraints, John significantly increases his prices for…