Fly Boy Knight

Another shining example of how a business built on common sense managing practices can be utterly DESTROYED by one lapse in common sense. Helga was dumb for offering the "drink now, pay later" scheme and the bar patrons were dumb becoming indebted to Helga over a matter of beer.

I always find it interesting how our current economic environment is based upon the accumulation, management, and maintenance of debt. Everything anyone does anymore, is shrouded in debt. People finance homes, cars, educations, aviation training, everyday household items (via credit cards).... Heck, Sears company makes more money off of their credit lines than the actual sale of products (as of 2007). I find it interesting and quite scary at the same time. The people are in debt up to the behinds and invariably, so is their government. We have a financial system in this country that sincerely believes if we can just print more money (with no commodity backing behind it AT ALL).... things will be ok. Meanwhile, the dollar's value is plummeting (more money in circulation = each dollar in circulation loses value), our national debt keeps climbing, and things like "financial stability" and "liquidity" (or lack there of) are now once known nostalgic ideas.

AKASHA

I will put up. Its a good discussion. Economics has never been a strong point for me, but I am having trouble understanding how the "absense of assets that can be converted to cash" refers to liquidity.

They may have been liquid assests before all the patrons become unemployed alcoholics. But the responsiblity for creating the debt rests not with the customers, but with the bar owner... imo. Yes, the alchololics are responsbile too, of course. But come on, they're alcoholics. You're playing with fire. The alcoholics have nothing to lose. Quite the opposite.. drinks on the house!

This is how I see it. What made her believe all the alcoholics would suddenly start drinking responsibly and getting jobs? She created a scheme to make it look like money was being made, sort of like Enron. An alcoholic will take what you give him. It doesn't relieve them of responsibility, but Helga and her partners should have known better.

jungle

Sir, do you understand that this story is a metaphor?

I take it you cannot cite any previous posting of this story as you earlier asserted?

Liquidity is a measurement, much like hardness in steel. Steel may be more or less hard, assets may be more or less liquid-semantics can be boring.

AKASHA

No, I thought we were talking about your latest business venture. No Helda then, eh? Let's see then... is this a metaphor on the impact of the subprime mortgage crisis on the collapse of financial markets?

I didn't look.

True. And a measurement can also equal zero. And when an asset's value measures zero, it can longer be characterized as liquid.

tomgoodman

An asset's value never goes to zero if the owner can find a "greater fool" who will buy it. Even the greater fool can profit if he knows that the asset, properly re-packaged, can be sold to a "super fool". It's only when the asset finally rests with the Ultimate Fool that it becomes illiquid. Ultimate Fools line up every November to hire their purchasing managers.

jungle

There are a fair number of fools worth quite a bit less than zero too.


Perhaps next time we can talk about installing a printer in the basement to increase liquidity.

Or even better, one of my favorites: If debt doesn't matter, why should revenue be a concern?

Winged Wheeler

tell us what happens next:

bailouts for Helga and her suppliers. Angry cash-paying patrons resent bailouts and form the "beer party". Spoiled and envious non-producers want to "occupy Helga". A GSE is formed by an expansionist government: federal drinking and subsidies for drinkers (Freddie Suds).

WW

Fly Boy Knight

HAHAHAHAHAHA!!!!! What an amazing, yet strangely familiar metaphor lol!