Tarun Reflex

October 26, 2008

Global Economic Crisis FAQ

With so much fear mongering and news coverage about the global financial crisis, I thought I should step in and make it clear to my readers what is really happening. When things go wrong on an epic, never-seen-before scale, you can always rely on the Pointless Wanderings blog to bring some clarity, continuity and calm into your lives. So, without wasting any of your time like all the news channels are doing, here is a quick FAQ.

Q: What’s happening, like, really?
A: Nothing much, I’m doing good. I saw the movie Rock On the other day and it was the….
Q:No, about this Global Financial Crisis thing. What’s happening there?
A: Oh, like that. Hehe… So what has happened is that the global financial system has ground to a halt. The LIBOR has shot up, the CDOs are frozen, and the Fed is promising to buy Commercial Paper now, to let businesses roll over their short term debt.
Q: Huh?
A: OK, here’s a simpler analogy. Imagine a giant airplane mid air. Now imagine that its run out of fuel. And imagine that the plane’s landing gear is damaged. And half of the wing is broken off. And the pilot is drunk. And you’re over the Indian Ocean, 500 kms from land. And the water is infested with sharks.
That’s the state of the global economy right now.



Q: But aren’t the governments going to “bail out” all the banks?

A: Not really. The word “bail-out” is actually a cricket metaphor, as in “taking the bails out to dismiss the batsman”. What the government is calling a bailout is actually a massive nationalization of all the banks. Earlier, only evil dictators and socialist governments used to do it, but now nationalizing banks is suddenly in fashion, because everyone else is doing it.
Q: But that’s not what all the analysis on TV says. They’re saying that the governments are “rescuing” the banks.
A: Before I can answer that question, lets first understand what “analysis” means. Its actually an ancient Greek word, meaning “The process of pulling things from one’s ass : anal-lysis”. All the talking heads on TV are pulling stuff from their behind and filling up the time because the producers of their news programs have to show something to fill time between the ads.
Q: So, how did all this start?
A: This all started with the sub-prime crisis. The sub-prime crisis happened when the traders on wall street could not come up with prime numbers (you know, like 7, 13, 39 etc…), so that they had to settle for a number that was lesser than a prime number. Hence the word sub-prime. What happens when you use numbers that are less than prime numbers is that your mathematical models break down, to the point where you have to divide by zero. And the division by 0 causes all hell to break lose.
You can try it on your calculator. Try dividing any number by 0. The calculator will show an error. That’s what has basically happened in the financial markets.
Q: So what is going to happen now?
A: Well, nothing much. A few more European banks are going to collapse, followed by a huge set of layoffs in the financial sector, which is going to hurt the IT outsourcing companies very hard, and that’s going to trigger a recession everywhere. Entire countries like Iceland and Argentina are going to go bankrupt.
Other than that, everything is going to be OK.
Q: Oh My God! What are we going to do now? What can I do to survive this crisis?
A: You probably should start learning some skills that will be useful when the world goes back to the pre-industrial era. Use the checklist below to determine how likely you are to survive this financial crisis. Answer each question with a YES or a NO
1. I know how to grow my own vegetables and rice


YES ____    NO ______


2. I have some carpentry or blacksmith skills


YES ____    NO ______


3. I have the capacity to do physical labor, and don't just sit in front of a computer all day, a skill that is entirely useless when the world runs out of electricity


YES _____   NO ____

If you answered YES to at least one question, you should survive fine. If you answered NO to all of the questions, now would be a good time to read the wikipedia article on farming.…………………..

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