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Give your views after reading the story.The best answer will win the book-Winning-Jack Welch.
 

The solution to economic downturn ?

It is August. In a small town on the South coast of France, holiday season is in full swing. But it is raining so there is not too much business happening. Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks to see a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the second floor.

The hotel owner takes the note in hurry and rushes to his meat supplier to whom he owes E100.
The butcher takes the money and races to his wholesaler to pay his debt.

The wholesaler rushes to the farmer to pay E100 for pigs he purchased some time ago.

The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit..

The prostitute goes quickly to the hotel, as she owes the hotel for her room use to entertain clients. She pays the hotel owner.

At that moment, the rich Russian comes down to the reception and informs the hotel owner that the proposed room is unsatisfactory and takes his E100 back and departs.

There was no profit or income. But everyone no longer has any debt and the
small town people look optimistically towards their future.

COULD THIS BE THE SOLUTION TO THE Global Financial Crisis? Or, is there a
catch here?

Give your views in the comment section below . The best comment will get the book-Winning- Jack Welch . Please mention your email id in the end. Every kamyabology member will get 100 points for his/her comment.

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5 Starmoney goes in circles
4 StarThe Global Economy is in Liquidity Crunch. In India recession is much more phscological, people are thinking of saving the money due to global crisis & this leads to less inflow of money in market. Specialy tourism, luxury items purchase, etc are most effected which in turn are effecting the small scale industry or local buisness like dairy, farming, etc. So, if there is no fear of recession & financial crunch is in mind of people then only the recession will be over.
5 Starbpls put your email id after your comments/b
4 StarGood and a new one..
5 StarYes this what is exactly happening ,when you have to pay out for the money you borrowed but very unfortunately the money lender can be called the Merchant of Venice who did even spare a pound of flesh.
5 StarThis is natural.Money comes &goes in that way.
5 StarThe tourist increased the liquidity through money supply. This is how money functions in the market. This story highlights the confusion between nominal & real value of the money which is operating between various people in the story due to paper money without any actual increase in the GDP or production. This is what happened in September 2008 when Lehman brothers declared bankruptcy followed by fall in share prices of Reserve Primary fund.The crisis almost developed due to the banking system: the redemptions caused a in demand for commercial paper, preventing companies from rolling over their short-term debt, potentially causing an acute liquidity crisis: if companies cannot issue new debt to repay maturing debt, and do not have cash on hand to pay it back, they will default on their obligations, and may have to file for bankruptcy. promsgarg@yahoo.co.in
5 StarThe meaning of the circle has become the opposite, that means every one in debt have became in credit and vice versa except the russian. adouda@gmail.com
5 StarExcellent SIMPLIFICATION of COMPLEXITY. However, this can not be the real solution to the downturn unless backed by something solid increased GDP. The packages offered by Govt. are synonemous to the Russian tourist. Excellent. POONAM e-mail: poonam.bilhatia@gmail.com
5 StarCan't it be linked to the financial aid extended by governments to banks, This paper money did not brought back economic stability but enabled banks to clear the debits. witness.stars@gmail.com
5 StarCan't it be linked to the financial aid extended by governments to banks, This paper money did not brought back economic stability but enabled banks to clear the debits. witness.stars@gmail.com
3 Star Even if all the actors of town would have gathered in a room and settled each other's due the problem would have been solved. This example illustrates the role of money as a facilitator in an even economy where people consume what they can afford. If for example the wholeseller would have been under huge debt from all actors, the russian's external funds would not have helped or he would have to return empty handed. The current problems of economy have been caused by using money as more than facilitator and generating money out of nowwhere or by the greed of few. Hence we need a wealthy russian who will not ask back his money and also correct the inequity of economic system in the long run for complete solution. Sohel Khan sohelmk@gmail.com.
4 StarMoney will not just come and go. This shows that the person who gets the money do not keep it back for a rainy day. In India what happens is people keep money for the future for security and this makes money rare and the crisis looms large. Let the money flow, in investments, purchases, banks, depositories etc. so that the money brings in happy times. seeemraj@sify.com
5 StarYes. This is an answer to the Global Financial Crisis. Money has not gone to some other world, but is here on earth, immensely mismanaged. Take an example of a person who has taken a loan to buy a house. The lack of money here would be for the one who has given out the loan and the one who has taken the loan. But the money would remain with the person to whom the sum has been paid. But if every one is in debts, where has the money gone. It is surely a matter of financial mismanagement. When loans are given out indiscriminately and in an indiscreet manner, a vicious circle of debts is created, wherein when one fails, everyone related is trapped. The world economy should look into the matter collectively and try to figure out where the things have gone wrong. A proper channeling of money can bring back the economy of the world back to track.
5 StarYes. This is an answer to the Global Financial Crisis.Money has not gone to some other world, but is here on earth, immensely mismanaged. Take an example of a person who has taken a loan to buy a house. The lack of money here would be for the one who has given out the loan and the one who has taken the loan. But the money would remain with the person to whom the sum has been paid. But if every one is in debts, where has the money gone. It is surely a matter of financial mismanagement. When loans are given out indiscriminately and in an indiscreet manner, a vicious circle of debts is created, wherein when one fails, everyone related is trapped. The world economy should look into the matter collectively and try to figure out where the things have gone wrong. A proper channeling of money can bring back the economy of the world back to track. nagmachatterjee@yahoo.com
5 StarThe economy moves smoothly when cash to cash cycle is not disrupted. In vase of a liquidity crunch,the cycle is blocked somewhere due to fear or lack of belief that the cycle will be broken somewhere. In this PPT also, if the cycle had been broken at any level, the result would have been entirely different.
5 StarThe catch is in human behaviour. In recessionary times .. people dont use the money they get to settle debts or loans .. they hoard the money with themselves for the 'future' ... in the ral world the HOtel manager would never have gone out and paid the meat supplier. he would haqve kept it to himself in the hope of using it for services he might have to use and where he might not credit. In a few minutes, the Russian would return adn take his money back. The loop would close and the human tragedy would continue !! : Hemantkumar Jain from www.arbitmba.com
5 Starthis is a short term solution of a long term problem. in this system money circulates within no time through many hands create a short term relief.
5 StarThe Economic Meltdown is the result of off balance between Demand & Supply.The crisis is due to inflated demand & choaking of supply chain origin.We must be very conscious now on the revival of supply chain.Demand is already existing, flow of supply are cut intermittantly. forslahiri@sify.com
5 Starreally it is a good and live story
5 Starvery goood