Solution to the global financial crisis?

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In a small town on the South Coast of France, the holiday season is in full swing, but it is raining so there is not too much business taking place.

Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel.

He asks for a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes E100. The butcher takes the money and races to his supplier to pay his debt.

The wholesaler rushes to the farmer to pay E100 for pigs he purchased some time ago.

The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit.

The prostitute quickly goes to the hotel, as she was owing the hotel for her hourly room used to entertain clients.

At that moment, the rich Russian comes down to reception and informs the hotel owner that the room is unsatisfactory and takes his E100 back and departs.

There was no profit or income.

But everyone no longer has any debt and the small town’s people look optimistically towards their future.

Could this be the solution to the global financial crisis?

Source: Unknown

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5 comments to Solution to the global financial crisis?

  • Dave

    I feel a bit of a spoil-sport here, but I don’t see the parallel. These business people had debts, but they also had accounts receivable, they had no net debt, so no real pain to feel sorry about. Well that’s how I read it.
    Is someone suggesting that if there had been an investment bank manager in this traders circle there was someone who in turn owed him money? The Russian, the prostitute and everyone else in the circle would be after him, each for a E100.

  • mark s

    i believe this is called quantitative easing

  • Robert Loest

    Might be a bit more interesting proposition in a world where debt was free.

  • gofer

    May 11th, 2009 at 3:44 pm

    Include GS here that takes the $100, issues equivalent of $1000 in derivatives. Some insurance company comes along and sell insurance for $100 on the derivative. GS pays congress and SEC , and execs $200. sells the 1/2 of derivatives for $500 to unsuspecting 401Kers as AAA investments. The Russian returns demands his money. GS doesn’t have it . 401K s go bust. GS books look bad. Now they have $300 derivatives on the books worth -100$. Government collects taxes from every body for $100, plus sells some bonds to Chinese for $300. Pays GS $200. GS now has $100. Government Pays $20 to stimulate the framer/Economy,through the prostitute. GS issues another $200 of new well regulated stocks. $01Kers are happy to jump on the next great investment! . The Hooker beats the estimate, Banker beats the estimate,Every body beats estimate! Every body is happy!

  • Rich

    When the Russian took back the E100, the hotel owner was out the E100 since he had already spent it. He is not happy.

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