Dr. Frank Lee Noegood is a piles doctor at an apothecary in Britain. The region where Dr. Noegood practices is inhabited by a large number of alcoholics who are do not have a regular source of income. These alcoholics, being heady by nature, often indulge in reckless drinking binges and outrageous gastronomic exertions and expectedly end up suffering from a variety of extremely painful disorders involving the unmentionables (which, hitherto, shall be mentioned in the most colourful of apellations, readers’ sensitibilities notwithstanding).
In order to increase his practice, Dr. Noegood decides to allow his loyal patients – the unemployed alcoholics – to have their butts examined but he allows them to pay later. He keeps track of the medicines he dispenses and the number of times he inserts his lubricated finger into the sore tooshies of his patients on a ledger, thereby practically granting his patients health loans. As you may see, his methods sometimes appear to be cruel, but his intentions are undoubtedly philanthrophic in nature. In a token exchange, however, Dr. Noegood keeps the empty beer bottles brought in by his patients in large numbers as guarantees against defaults of payment.
Word soon gets around and as a result increasing numbers of patients flood into Dr. Noegood’s clinic. Taking unscrupulous advantage of his patients’ freedom from immediate payment constraints, Dr. Noegood increases his prices for sigmoidoscopy, the most-commonly done diagnostic drill on the inflammed arse. His diagnostics volume increases massively. His lubricant supplier borrows a huge loan and sets up a warehouse of lubricants. At this point, his sister, Rhea Lee Noegood, who happens to be a dynamic customer service consultant at the local bank recognises these patients’ debts as valuable future assets and increases Dr. Noegood’s borrowing limit. She sees no reason for undue concern since Dr. Noegood assures her that he has the empty beer bottles of the alcoholic patients as security. As cheap credit is abundant, the loans get easily funded by a host of pension funds, hedge funds, soverign funds, mutual funds and insurance companies which are promised returns in excess of 100%. Flush with oodles of borrowed money, Dr. Noegood embarks on an exuberant lifestyle, has botox all over his face and begins vacationing at exotic destinations like British Virgin Islands with his gorgeous girlfriend.
At the bank’s corporate headquarters at Balls Street (across the Atlantic in US), expert investment bankers huddle together and find a way out to wring out an extra few ounces of dough (moolah, boodle) from the money market. They somehow leverage these customer assets into collateralised debt obligations called Painbonds, Poopiebonds and Fartbonds and manage to fob off these CDOs to greedy and gullible investors. These securities are then traded on markets worldwide. Credit rating agencies like Fudge and May-Rules-Be-Lynched are then invited to stamp their approval on the deal. They rate Fartbond, Poopiebond and Painbond with CCC, BBB and AAA ratings respectively, in return for a fat fee. However, no one really understands what these collateral debt obligations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items. Bankers in Ball Street become tremendously rich.
One day, although the prices are still climbing, a risk manager of the bank, alarmed by the falling prices of empty beer bottles, decides that slowly the time has come to demand payment of the debts incurred by the patients at Dr. Noegood’s clinic. He knocks at Dr. Noegood’s doorstep, who then approaches his patients for repayment of the debts. The patients – unemployed alcoholics - however, cannot pay back the debts because they have no money. Cornered, and under severe financial crunch, Dr. Noegood then offers the empty beer bottles to the bank, which refuses to accept them and asks for the debts to be settled by cash. By now the clinic has transformed into a huge warehouse of empty beer bottles and discarded smelly handgloves smeared with poopie, but they are of no use as Dr. Noegood is in no position to fulfil his loan obligations and claims bankruptcy.
As the news of Dr. Noegood’s bankruptcy spreads, Painbond and Poopiebond drop in price by 95%. Fartbond performs slightly better, stabilizing in price after dropping by 82%. The suppliers of Dr. Noegood’s clinic, having granted him generous payment due dates and having invested heavily in the sigmoidoscopy tools are faced with a new and dangerous situation. His antibiotic supplier goes belly up, his lubricant supplier is taken over by a competitor from India. The bank, nearly insolvent by now from the effects of credit freeze, and burdened by millions of empty beer bottles having absolutely no value, is saved by the Government following dramatic and desperate consultations by leaders from the governing political parties, most of whom have itchy bottoms. The funds required for this purpose are obtained by a tax (impots) levied on those who do not have piles.
The Financial Crisis, finally, stands explained.