A Comic On How The Global Financial Crisis Erupted - Business - Nairaland
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| A Comic On How The Global Financial Crisis Erupted by DKNYtruth(m): 7:48pm On Apr 28, 2009 |
[b]Nnamdi is the proprietor of a Fufu and Isi-Ewu Shop (Exotic Nigerian food) in Lagos, Nigeria. Sales are low and, in order to increase them, he comes up with a plan to allow his customers to eat now and pay later. He keeps track of the meals consumed on a ledger. Word gets around and as a result increasing numbers of customers flock to Nnamdi’s shop. His suppliers are delighted and are very willing to sell more and more raw materials for the meals he prepares. Nnamdi shows them his ledger of receivables and they extend him credit. A young and dynamic customer service consultant at the local Nairaland bank recognizes these customer debts as valuable future assets and gives Nnamdi a credit line and then increases Nnamdi’s borrowing limit. Taking advantage of his customers' freedom from immediate payment constraints, Nnamdi jacks up the prices of his Fufu and Isi-Ewu. Customers don?t mind as they are not required to pay on the spot. Sales volume increases massively; Banks and suppliers lend more; Nnamdi opens more outlets in Abuja, Kaduna, Port Harcourt and Ibadan. He sees no reason for undue concern since he has the debts of the customers as collateral. At the bank's corporate headquarters, expert bankers recognize Nnamdi's customer loans as assets and transform these customer assets into Bonds. These negotiable instruments are given exotic names such as FoofooBond, IsiBond, EwuBond AND EgusiBond. These securities are then listed on the Stock Exchange and traded on markets worldwide. No one really understands what the names mean and how the securities are guaranteed but, nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices are still climbing, a credit risk manager of the Nairaland bank decides that the time has come to demand payment of one of the debts incurred by Nnamdi. Nnamdi in turn asks his clients to pay up. One by one they refuse; the clients cannot pay back the debts. Nnamdi refuses to serve them anymore. The clients stop coming. Nnamdi is really screwed now. He cannot fulfill his loan obligations and therefore claims bankruptcy. All bonds drop in price by between 80 to 95%. The suppliers of Nnamdi, having granted generous payment due dates and having invested in the securities are faced with similar problems. The goat-meat supplier defaults on payment to the Mallam who sells goats to him and to the cattle supplier and claims bankruptcy. The yam supplier is taken over by a competitor; Nnamdi lays off the cook and staff. Bankruptcies soar, unemployment mushrooms. The Nairaland bank that lent the money in the first place is set to collapse. It is saved by the Government following dramatic round-the-clock consultations by leaders from the Peoples Undemocratic Party with Nnamdi commuting back and forth in his Executive jet and Mercedes 500SEL, brokering the deal. The funds required to save the economic collapse are obtained by a tax levied on the citizens, most of whom do not eat Fufu or Isi-Ewu. "THIS IS HOW THE GLOBAL FINANCIAL CRISIS ERUPTED"[/b] 1 Like |
| Re: A Comic On How The Global Financial Crisis Erupted by loma(m): 3:13pm On May 06, 2009 |
Plagiarism! The above is an article I wrote in early April. Haba! https://www.nairaland.com/nigeria/topic-259381.0.html |
| Re: A Comic On How The Global Financial Crisis Erupted by Kaestro(m): 3:52pm On May 06, 2009 |
@ Ioma.Good job you even gave credit. For the benefit of those who missed the initial post.Thanks to poster. |
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