The Mortgage Mess Explained

Heidi owns a bar. To increase sales, she allows her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks on a ledger, effectively granting customer loans. Customers flood into Heidi's bar to take advantage of this and sales volume increases massively. A local bank manager recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit. He's confident because he has the debts of the alcoholics as collateral. The bank's corporate headquarters transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS and these securities are traded on markets worldwide. No one reallyunderstands how the securities are guaranteed but the securities become top-selling bonds. One day, a risk manager of the bank decides to demand payment of the debts incurred by some drinkers at Heidi's bar. However they cannot pay back the debts and Heidi cannot fulfill her loan obligations. Heidi claims bankruptcy and DRINKBOND, ALKBOND and PUKEBONDS drop in price by 95 %. The suppliers of Heidi's bar are impacted by this. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic meetings with the local political parties.The funds required for this purpose are obtained by a tax levied on the non-drinkers.