Heidi is the proprietor of a bar in Berlin . In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed in a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Heidi ' s bar. Taking advantage of her customers ' freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi ' s borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank ' s corporate headquarters, expert bankers transform these customer debts into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these names mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices are still climbing, a risk manager of the bank, (subsequently of course fired due to his negativity), decides that the time has come to demand payment of the debts incurred by the drinkers at Heidi ' s bar. However they cannot pay back the debts. Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. Banks around the world that have been buying up these bonds are in trouble. The suppliers of Heidi ' s bar, having granted her generous payment due dates and having invested in the securities are faced with a dire situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. Meanwhile, the alcoholics are still drinking up what stock is left, until the authorities foreclose on the bar and throw the bums out. Politicians, seeing future voters in the alcoholics, propose to keep the bar open and provide bailout funds to keep supplying beer and wine to the alcoholics. They believe that eventually, the alcoholics will get tired of drinking, get jobs and repay the debts if only they refinance the debts. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties. The funds required for this purpose are obtained by a tax levied on the non-drinkers. Finally an explanation I understand ...
