Originally posted by Mocheol:
scharlott,
The internationalist argument will only work on a level playing field.
This is not the case because of self interest . Both EU and USA artificially distort, by state intervention, subsidy or tax relief, all fields of economic activity.
This is a music forum and I dont want to digress too much.
I still hold the view broadly speaking that national self interest is best served by purchasing goods made in ones home state.
Anyway,best remedy for recession is go out buy a brand new piano ,especially one that you cannot afford.
This will dispell all gloom and lift the economy , therby enriching you to clear the repayments on that grand piano more quickly.
This argument cannot be contested.
Just one piano?
I think we can do better than that. Here is how we can jump start the piano economy. We will
start as a humble piano storage company that provides a nice climate controlled home for pianos
temporarily. In addition to storing pianos we also have units that we lease out. Let us call
our new company The Piano Bank. We can sell stock to fund our initial round of pianos. But
storing and leasing pianos doesn't pay enough to satisfy our shareholders. They demand 10%
growth a year and the piano market is not large enough to accommodate it.
In order to continue growing we decide to start buying pianos directly to expand our units
instead of waiting for demand from clients. To fund this venture we will sell bonds and slip
the ratings agency a big bribe so that we have a AAA rating. But now there is a small problem.
Pianos are in high demand, mostly because of us, and we end up paying up to 3 times list for
them.
Free from the constraints of demand our piano facilities grow rapidly, and we use this asset
base to borrow ever increasing amounts of money to fund our expansion. We then use much of the
fresh capital to begin buying our competitors, and convert them over to our business model.
Soon there are only a few large piano banks, since the only companies that can afford to compete
with us are doing the exact same thing.
We are growing even faster than before. We buy pianos by the container full. It becomes well
know in the industry that we don't even look in the containers and soon they are filled with all
sorts of rubbish. Some are even empty, but we are making a fortune on paper and so we do not
care. The shareholders are thrilled and our stock skyrockets, and everyone is happy. But there
is a problem. What do we do with all the pianos? We know we over paid for them and some don't
exist. We might even face criminal proceedings for fraud if it is found out. So we go to
congress and have them make pianos exempt from normal mark to market rules. So we never sell
any pianos, we just keep them on the books at 3 times their value.
This works well for a while but at some point we cannot get any more loans for expansion.
Perhaps a raise in the interest rate, or maybe one of our bond issues fail to sell. We can no
longer finance our continued expansion and the share price peaks. Shareholders start asking
questions. The SEC launches an investigation which we manage to delay indefinitely due to our
influence. Then the unthinkable happens. A rumor starts that our pianos are over valued and
that some of the pianos in storage for clients have been sold or lent out to make ends meet.
Whispers abound that many of our pianos unplayable or nonexistent. There is a run on the
piano bank as everyone rushes to take their piano out at the same time.
We call the government to intervene and they shut down the piano market for a few hours, and then
guarantee the value, and existence of all the pianos on our books. Now we are insolvent and
everyone knows it, but it doesn't matter since we have the backing of the government. In panic
federal regulators send in piano techs to evaluate our pianos, and to their horror they are in
terrible shape. In fact many have been damaged irreparably and cannot be sold at all. Other
pianos are completely fictitious and the containers are empty. To make matters worse we have
taken out huge insurance policies that have been sold to all the other leading piano companies.
If we go under the insurance policy chain will unwind and bankrupt the entire industry. We
have become too large to fail.
The government calls the heads of all the major piano companies together to decide what to do.
They then blackmail congress in order to pass an emergency bill in order get us enough cash to
ward off bankruptcy for a few months, but everyone knows its only a matter of time. At this
point the government kindly steps in and offers to set up a quasi government entity. Lets call
it The Bad Piano Bank. At the taxpayers expense the bad piano bank takes all the pianos off
our hands for a little more than we payed for them. Their charter is to hold the pianos until
the market recovers enough to sell them. Unfortunately, it proves too expensive to evaluate
each piano to see if it is salvageable and so all pianos are trucked off to an abandoned salt
mine. The Piano Bank, on the other hand, is made whole. To celebrate our huge windfall We
will take the corporate jet to a spa and spend the government money on golf and booze.
And, a fitting reward for fraud, our CEO gets a treasury post.
