Dummies Guide to What Went Wrong In Club-Med Europe!

London, UK - 28th June 2012, 00:10 GMT

Dear ATCA Open & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

On the eve of another major European summit Club-Med countries wait eagerly for their "joint bailout" decision by German Chancellor Angela Merkel even though she has categorically said, "NEIN!" We present for your entertainment and edification the narrative of "Helga's Bar in Club-Med!"

<< Helga is the proprietor of a bar in Club-Med within Europe. >>

She realises that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronise her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Helga keeps track of the drinks consumed on a ledger (thereby granting the customers’ "LOANS").

Word soon gets around about Helga’s “drink now, pay later” marketing strategy and as a result, increasing numbers of customers flood into Helga’s bar.

Flaming Cocktails at Helga’s Bar

<< Soon she has the largest sales volume (but no actual money) for any bar in town. >>

By providing her customers freedom from immediate payment demands, Helga gets no resistance or complaint when, at regular intervals, she substantially increases her prices for wine and beer -- the most commonly consumed beverages.

Consequently, Helga’s gross sales volumes and paper profits increase massively. A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Helga’s borrowing limit. He sees no reason for any undue concern, since

<< He has the debts of the unemployed alcoholics as collateral... >>

He is rewarded with a six figure bonus for being a clever banker.

At the bank’s corporate headquarters within Club-Med, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS. These “securities” are then bundled and traded on international securities markets including London, Frankfurt, Paris, Milan, Madrid etc...

Naive investors who buy into these DRINKBONDS don’t really understand that the securities being sold to them as “AA Secured Bonds” are really debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb and the securities soon become the hottest-selling items for some of the leading brokerage houses across Europe.

<< The traders all receive six figure bonuses. >>

One day, even though the bond prices are still climbing, a risk manager at the original local bank within Club-Med decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar. He therefore informs Helga.

<< Helga is in turn then obliged to demand payment from her alcoholic patrons >>

but being unemployed alcoholics, they cannot pay back their drinking debts. Since Helga cannot fulfil her loan obligations to her local bank she is forced into bankruptcy.

<< The bar closes and Helga’s 11 employees lose their jobs. >>

Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community. This contagion rapidly spreads upwards to the parent bank within Club-Med and the bank collapses. These local and national financiers of Helga’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the DRINKBOND securities. They find they are now faced with having to write off her bad debt at a loss of over 90% of the presumed value of the bonds as they are restructured.

<< Her wine supplier also claims bankruptcy >>

closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective senior executives within the Club-Med financial community are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the rich AAA government(s) that can borrow -- for the moment -- in the world markets at near zero rates. All the international bankers and brokers involved in this fantastic "Rescue Plan" receive a six figure bonus.

The extra funds required for this massive Club-Med bailout are then obtained by new taxes levied on employed, middle-class, non-drinkers who have never been domiciled in Club-Med never mind visit Helga’s bar!

<< Now do you understand? >>


We have no idea where this narrative originated. It was forwarded to us by some of the ATCA 5000 distinguished members in the last few days. If you have any information on its pedigree, we would be glad to update this witty -- and somewhat alarming -- allegory. Whichever category one chooses for this tale, it is probably one of the most succinct and accessible explanations for the Eurozone financial crisis with a global resonance. One question remains: The high finance executives who were smart enough to get us here, do they have a Plan B? Or they don’t have to?


What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.


Expert Roundtables

Expert roundtables are the newly launched ATCA 24/7 Q&A private exclusive club service. They seek to become the killer application in strategic intelligence by delivering an unprecedented competitive advantage to our distinguished members. They can only be accessed online at https://www.yammer.com/atca

Q1: How to become a privileged member of ATCA 24/7 to participate in the expert roundtables?

A1: i. If you are a distinguished member of ATCA 5000, ATCA Open, The Philanthropia or HQR affiliated groups you may be allowed to become a privileged member of this new and exclusive private club.

ii. If you are pre-invited, visit the private intelligence network -- PIN -- by going to https://www.yammer.com/atca [Note: In https:// 's' is for security and encryption]

iii. If you don't have membership of the PIN yet, email the mi2g Intelligence Unit at intelligence.unit at mi2g dot com for an exclusive invitation.

Q2: How to participate in the expert roundtables and get domain-specific strategic intelligence questions answered?

A2: Access the ATCA 24/7 Private Intelligence Network -- PIN -- online and ask or answer a strategic intelligence question, no matter how complex. Receive expert answers within 24 hours or get pointers from:

i. ATCA 5000 experts who are online;
ii. ATCA Research and Analysis Wing; and
iii. mi2g Intelligence Unit.

Q3: Why is the ATCA 24/7 Q&A Exclusive Club special?

A3: ATCA 24/7 has now created an exclusive private intelligence watering hole and expert roundtable at the highest level where interesting and sophisticated questions are being asked from around the world, and intelligent answers are being provided, almost always by experts who have deep domain-specific knowledge. Come and check out the exclusive club, take it for a strategic test drive, which sign-of-intelligent life are you waiting for?

To learn more about "The Expert Roundtable: ATCA 24/7 Q&A Club" email: intelligence.unit at mi2g.com and if you are already a member visit https://www.yammer.com/atca

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Best wishes

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

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