Rhapsodies & Rants: Dec. 28, 2011

Partying Safe on New Year’s Eve

Thank you for your New Year’s Eve coverage, but why wasn’t there anything in the article about drinking and driving? I would hope our media would remember to remind those on New Year’s Eve to stay away from the wheel if they have been drinking. Remember that a little bit of Champagne can turn into a lot of sorrow if you try to drive home.


Starting Over, Equal

Two thousand years ago, Christ chased the money-changers out of the temple. Four hundred years ago, Chief Seattle stated, “No one can own the Earth. She is our Mother. We must serve Her in gratitude for giving us life and sustaining us.”

Robber barons started the banks and began practicing usury (which has been declared illegal in Europe), and made three times their loans back in interest. They still do. For hundreds of years, the practice of “debt forgiveness” in Europe was done, every 40 years (the average life expectancy then).

Today in the United States, over 40 million people are in poverty, while the top 1 percent—bankers, stock brokers, financiers and corporate CEOs—have 43 percent of the money.

I think it’s time to start over, equal. All debt erased. The United States was founded on the ideal of equality. Money is merely a measuring system, like inches. It has no inherent value. Our monetary system must facilitate an even exchange of materials and services so that we each receive value equal to what we give.


Simple Enough

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.

By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices. 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 because 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. These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold as “AAA Secured Bonds” really are 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 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. Heidi then demands payment from her alcoholic patrons. But, being unemployed alcoholics, they cannot pay back their drinking debts. Heidi is forced into bankruptcy. The bar closes, and Heidi’s employees lose their jobs. Overnight, DRINKBOND prices drop by 90 percent.

The collapsed bond asset value destroys the bank’s 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 BOND securities. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, and her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately, the bank, the brokerage houses and their respective executives are bailed out by a multibillion dollar, no-strings-attached cash infusion from the government. The funds required for this bailout are obtained by new taxes levied on middle-class nondrinkers who have never been in Heidi’s bar.

Now do you understand?

Glen Ellen

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Sonoma County Library