Banking Crisis Explanation for Dummies

Apr 5, 2009   //   by Hackadelic   //   Blog  //  2 Comments

Solet (his name)There are many complicated explanations of the banking crisis, but it all comes down to some very simple patterns of human nature.

Here is one that’s actually quite plausible:

Attention: Joke follows 😉

Young Chuck moved to Texas and bought a donkey from a farmer for $100.00. The farmer agreed to deliver the donkey the next day.

The next day he drove up and said, ‘Sorry son, but I have some bad news, the donkey died.’

Chuck replied, ‘Well, then, just give me my money back.’

The farmer said, ‘Can’t do that. I went and spent it already.’

Chuck said, ‘OK, then, just bring me the dead donkey.’

The farmer asked, ‘What ya gonna do with him?

Chuck said, ‘I’m going to raffle him off.’

The farmer said ‘You can’t raffle off a deaed donkey!’

Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’

A month later, the farmer met up with Chuck and asked, ‘What happened with that dead donkey?’

Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $998.00.’

The farmer said, ‘Didn’t anyone complain?’

Chuck said, ‘Just the guy who won. So I gave him back his two dollars.’

Chuck now works for the bank.

Conclusion: Every crisis starts with some smart-assed “donkey”. The banks are only doing their job. 😉


  • Well, it’s a good joke but it doesn’t hit the points of the lesson learnt and what will be the “changes” after that crisis. I have been thinking

    1. how could “the” banker tell/sell the smart-assed ideas to public, I want to learn the skills …

    2. who’s the losers, why did they being trapped – too naive or too aggressive

    3. If people won’t fully count on bankers, what will be the changes … I think more people they will do their investment and the analysis on their own, so the market data and the associated IT technology will be needed for home users

    4. Programmers should equip story-telling skills like the bankers, so that they could project their ideas, ordinary people (no matter the wealthy or the poor) won’t believe unless they see it or get pain …

    • Patrick, some thoughts in return:

      1. I think Chuck’s “skills” are really cheating skills. (You could say he’s been inventive, but the fact that he is selling an a priori non-existing prize makes it cheating.) So you are basically saying you want to learn cheating skills. 😉

      2. IMO the reasons why people fall for lottery-style “products” (I’d say “constructs”), is:

      (a) There is no up-front, big-bang loss. $2 is not much for the chance to win a $100 prize. There is a very low “entry barrier”.

      (b) The nature of the “product” is known as hazardous, so it is bought in another mindset: You say goodbye to the ante it the very moment you bring it in. If you win, it’s luck. If not, you don’t complain. Finally, you knew it was hazard.

      (c) For the “players”, a sort of boilng frog effect comes into play. Like with any hazard, there is danger you don’t stop until you’ve lost everything.

      It is also for the same reasons why lottery-like stuff doesn’t need too much selling skills. It only takes a sufficiently attractive prize, and enough visibility (= opportunity for players to join in).

      3. This is a trend in progress already. The smart folks have long understood that, for ex., fund managers are not 10% as smart as they (want to) sound, and that “managed” funds is often just another name for “suboptimal performance” funds. (Actually I’ve read that the vast majority of the “managed” funds have been regularly outperformed by stock-indexes. In other words, “managed” funds performance have been regularly below average economic growth in the corresponding area. Lame!) The less smart folks are beginning to catch up, too. Same is true about “quality of service”. In Germany at least, so called “direct banks” (i.e. purely Internet-based banking with no physical terminals) are a long ongoing trend. Why? Because people have understood that there’s nothing a “bank consultant” could do for them that they couldn’t do for themselves better.

      4. I’m not sure if this is possible at all. I suspect the states of mind (or perhaps brain-shapes) required to be a great programmer and a great marketer may be too different to peacefully co-exist in the same head. 😉

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