Tracking my readers

I have installed an application to track the location of my beloved readers, the time they last accessed the blog and the posting that was accessed. I have done this out of personal interest and I wish to know which posting is most visited. If you wish to erase your tracking, please do so by accessing http://live.feedjit.com/live/b44c12ca81130217/ and click on the "Remove your IP" button.

And that is why we are in trouble....

Linda is the proprietor of a bar in Cork . 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 on a ledger (thereby granting the customers loans). Word gets
around and as a result increasing numbers of customers flood into Linda's bar. Taking advantage of her customers' freedom from immediate payment constraints, Linda 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 Linda'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 assets into DRINKBONDS, ALKBONDS and PUKEBONDS.

These securities are then traded on markets worldwide. No one really understands what these abbreviations 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 (subsequently of course fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Linda's bar. However they cannot pay back the debts.

Linda cannot fulfil her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%. The suppliers of Linda's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government
following dramatic round-the-clock consultations by leaders from the governing political parties (and vested interests). The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Finally an explanation, in the language that we understand...

Spend or Save

In the current economic condition, is it wise to spend or save? While some advocate "save" in times of trouble, others suggest "spend" to get out of the same troubled times.

Here is an interesting case I came across recently.

A company asks its employees to stop using the big courier services and use the cheaper govt run postal service for all its postal needs. This way it hopes to cut cost.

This case leaves me with the following possibilities and questions.

1. If the size of the company is small (in terms of its postal needs), the courier folks haven't lost much, but what if most small companies adopt this cost cutting measure.
2. If the size of the company is big (in terms of its postal needs), the courier folks are looking at some serious loss of business, forcing them to a few cost cutting measures of their own.
3. Is cheap better only during economic crisis? Will the company return to courier services once the situation improves?
   

Senate passes the stimulus bill !!

Updating my blog within minutes of the Stimulus bill being passed in the senate!!

"Not a moment to Spare"

The stimulus package passed in house. Senate next. In Obama's words, "Not a moment to Spare"

Economic Stimulus (Part 1)

We all know what happens as we move on from autumn to winter season. The deciduous trees shed leaves primarily because the high costs involved in their maintenance would outweigh the benefits from photosynthesis during the winter period of low light availability and cold temperatures. And in spring the we see growth, renewal and new life. But can we stimulate spring during winter and expect similar results in terms of growth? I am not an expert in that field but a similar attempt is being made (and has been made in the past too), to stimulate growth back into the economies world wide.

The argument is made that people are suffering from a decline in income, and thus the government should give them money so they can buy more and put others back to work. Sounds good - but where does the government get the money? It must either tax someone else now or borrow more money, which diverts productive saving to current consumption. Either way, it is less than a zero-sum game.

Blogging

The last post was dated Jan 11th. The date on this blog is Jan 12th. Only difference is that the two posts are about a year apart. What kept me away from blogging this long? I am sure there is an economic reason behind it, Or to put it in other words, the reason can be explained in terms of economics. Watch out for details.