Osborne-omics

Joe Soap is the mortgaged owner of a popular London pub. For some time, Joe has been feeling a bit uneasy about the dwindling numbers of drinkers. However, it was simply that Joe's customers are now mostly on zero hours contracts. For his regular clientèle money is increasingly harder to come by. So the clientèle can no longer afford to patronise the pub every day. Joe resolves try and sort the business problem. He comes up with a revolutionary new business plan. One that allows Joe's customers to drink now and pay later. So he keeps track of the drinks consumed in a ledger. Word gets around about Joe's "drink now, pay later" business strategy and, as a result, increasing numbers of customers flood into the pub. Soon Joe has the largest sales by volume, for any pub in the whole of London.

This is how business entrepreneurs have been working since 1960.

By providing his customers with credit and so the freedom from immediate payment. Joe gets no resistance from the customers when, at periodic intervals, he substantially increases the prices for wine and beer. Consequently, due to the popularity, Joe's sales volume increases massively. A young and dynamic banker, reads in the business press about Joe's success and recognises that the customer debt actually constitute valuable future asset. He calls Joe into the bank and convinces Joe to increase his borrowing limit, allowing Joe to open more pubs. The banker sees no reason for any undue concern, since he has the debts of the zero hour customers as collateral.

Joe's success naturally comes to the attention of one of the corporate traders at the banks headquarters. Soon the trader and joe's banker, figure a way to make a few large commissions. Made through the simple expediency of transforming the customer, drink now and pay later loans into Drinking-Bonds, Alki-Bonds and Puke-Bonds. Such is the success of Joe's business that the drink now and pay later securities are subsequently bundled and traded on the stock markets. The investors did not really understand that the securities being sold to them as triple 'A' secured bonds. Were in reality, Double 'A' bonds as the debts of mostly unemployed alcoholics.

This is how the business brokerage sector has been working since 1980.

The news of Joe's success travelled far and wide. As a result the bond prices continued to steadily climb. Before long, the drink now and pay later securities, were taken up by other pubs. To become the hottest-selling items for the leading brokerage houses.

Even though the bond prices were still climbing, a risk manager at the bank, became a touch jittery. He was suspicious about the rocketing success of the business. He decides that the time has come, to demand part payment on some of the debts incurred by the drinkers at Joe's bar. Joe was now required to start and call in payment from his now indebted, inebriated, unemployed, alcoholic patrons. However, being unemployed alcoholics, unsurprisingly they cannot pay back their drinking debts. Since, Joe cannot fulfil his loan obligations he is now forced by the bank into bankruptcy. The pub chain closes and the eleven employees all lose their jobs. 

Overnight, the bank tries unsuccessfully to sell on at a marked down price the loans. The market in Drinking-Bonds, Alki-Bonds and Puke-Bonds catches a cold. The bonds drop in price like a stone and are instantly converted into junk bonds. The collapsed bond asset value almost destroys the banks liquidity and prevents it from issuing new loans to business. As a result, freezing credit and economic activity in the business community. The bank is now even struggling to pay the staff performance bonuses.

This is how the business banking sector has been working since 1980.

The suppliers of Joe's bar had based on his success and turn over, granted him generous payment extensions. Other businesses had meanwhile invested their firms' pension funds in the various Drinking-Bonds, Alki-Bonds and Puke-Bonds securities. They all find they are now faced with having to write off Joe's bad debt and with losing all of the presumed high value of the bonds.

As a result, Joe's wine supplier is also forced into bankruptcy. Closing the doors on a family business that had endured for three generations. The liquidators come in and make their huge fees but there is little else for their creditors.  Joe's beer supplier is financially crippled and taken over by a hostile competitor, who immediately strips the assets and closes the brewery, sacking 150 workers.

This is how the suppliers to business has been working since 1920.

Fortunately though, for the bank, the brokerage houses and their respective executives. The banks are saved and bailed out by a multi-billion pound, no-strings attached, cash infusion from their cronies in Government. Quantitative easing is the new banking watch word. The performance bonuses continue to grow.

The funds required for this bailout are obtained by the government imposing an austerity budget. As well as new taxes levied on employed, middle-class, non-drinkers who have never been in any of Joe's bars. At the same time, the high earner bank and brokerage executives are granted a cut on their taxes. Then as the banks recover, the shares held in our name by the Government are sold off cheaply to Hedgefunds and other speculators. Proving there is money to be made in a crisis and that austerity is a sham.

Now, you should understand how Gideon Oliver Osborne-omics has been working since 2010.