[Vision2020] Understanding Derivitive Markets

[Tom Hansen]

The move gave me an excuse to go through the hard-drives (something I haven't done since Christ was a corporal).

We will be commencing our move on June 15th and concluding on July 15th when we we sweep up the empty beer cans and take them to Moscow Recycling.

Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho

"If not us, who?
If not now, when?"

- Unknown



On Jun 7, 2012, at 22:02, Dave <tiedye at turbonet.com> wrote:

> I thought you were moving.  Hard drives can be just thrown in a box...  I bet your wife is pissed.
> 
> 
> (P.S. been there, done that)
> 
> 
> Dave
> 
> 
> On 6/7/2012 3:04 PM, Tom Hansen wrote:
>> Something of interest that I came across while cleaning out some hard-drives . . .
>> 
>> ------------------------------
>> 
>> UNDERSTANDING DERIVITIVE MARKETS
>> 
>> 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 a new marketing plan that allows her customers to drink now, but pay later.
>> 
>> Heidi 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 resistancewhen, at regular intervals, she substantially increases her prices for beer and wine, 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 figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS, and PUKEBONDS.  These securities are then bundled and traded on international security markets.
>> 
>> Naïve investors don’t really understand that the securities being held 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 on thedebts incurred by the drinkers at Heidi’s bar.  He