Friday, November 7

Subprime crisis - In layman terms

Got this from a colleague.

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One day, a plain-looking man came with a pretty-looking OL (Office Lady) to the LV store in Causeway Bay (Hong Kong Island). He chose an LV bag worth HKD 65,000 for the OL..
When it came time to pay, the man took out a checkbook and wrote out a check.. The salesperson was hesitant because the couple hadn't shopped there before.

The man discerned what the salesperson was thinking and he said calmly: 'I sense that you are concerned that this check may bounce, right? Today is Saturday and the banks are closed.
Let me suggest that I leave the check and the handbag here. When the check clears on Monday, you can deliver the handbag to this lady. How about that?

The salesperson was reassured and gladly accepted the suggestion. In addition, he waived the delivery charges. He promised that he would personally make sure that this gets done.

On Monday, the salesperson took the check to the bank. The check bounced! The irate salesperson called up the client, who told him: 'What is the big deal? Neither you nor I have suffered any loss. Last Saturday night, I went to bed and screwed that girl already!
Oh, by the way, I thank you for your cooperation.'

This story reveals the nature of the sub-prime mortgage crisis. When people have high hopes for huge future returns, they lower their guard about the potential risks. This pretty girl thought that the HKD 65,000 LV bag was going to come home on Monday, and so she lowered her guard. Therefore, she believed that her investment in the ONS (one night stand) was worth it even though it was based upon huge and highly uncertain risks.

Investment companies are great with packaging high return (but high risk) deals. The Chinese stock speculators are like this pretty woman. As such, they deserve to lose money. Without people like these, how are people going to make money from the stock market?

As for the media and the stock analysts, they often play the role of the LV salesperson.

5 comments:

7-8 said...

Sounds like a fantastic way to gett off!!

khengsiong said...

A good one, hahaha...

Shingo T said...

numbernine/khengsiong:

Not exactly the best analogy, but a funny one at least. =p

(T) (H) (B) said...

If everyone is losing money, who the hell is benefitting from all these?

Pity the OL... :(

Shingo T said...

HB:
Thats why the "OL" are crying foul these days.

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