Clem Sunter

Eurowinked!

2012-03-14 10:58

Clem Sunter

Overheard in an exclusive club in Frankfurt in Germany was this conversation between Angie, a woman of great influence, and Charles, the CEO of one of Germany’s largest commercial banks. They were having coffee in the lounge after lunch. Angie is president of the club.

Angie: Charles, you need a haircut.

Charles: No I don’t. I had one last week. You can see I have no hair on my neck.

Angie: I am not talking about that kind of haircut. You know George owes you one thousand Euro and he needs to repay you next week. Well, I want you to forgive 535 Euro of his debt and have him only pay you 465 Euro.

Charles: But then he is defaulting on his debt and I am going to lose more than half the credit I extended to him. That makes me especially angry as the rating agencies gave him a triple A.

Angie: Don’t talk like that, Charles. You are going to volunteer to take a haircut on the money he owes you, shave the figure so to speak. Anyway, I know that you are probably insured for part of the loss.

Charles: Maybe, but why on earth should I do this?

Angie: Because we are a club, Charles, and I also know that you have been very generous and lent money to other members such as Peter, Sam and Ivan.

Charles: I must say they are all spendthrifts, lashing out on things they really don’t need. I had the money and I felt sorry for them because they are people like us. They just fell on hard times. Besides which we have to put up a united front.

Angie: Precisely, and if people who are not members of this club get to hear that George unilaterally defaulted on his debt and created what I know you call a credit event, it would reflect badly on our collective image.

Charles: I see what you mean.

Angie: Moreover, it might mean that the world outside becomes harsher to Peter, Sam and Ivan. Then they might not be able to repay their loans either and your back pocket would receive an even bigger hit. Contagion can be nasty.

Charles: Gosh, I suppose I better take your advice.

Angie: However, I have one other favour to ask of you. Please would you roll over the 465 Euro and make it a new loan to George.

Charles: How will I know that I won’t receive another haircut?

Angie: Just be a dear. George has promised to adjust his lifestyle and live within his means. As you yourself said, the club must stick together. There is no alternative, Charles.

Charles: You remind me of the Iron Lady. Perhaps I should call you Maggie in future.

Angie: I am Maggie to a T when it comes to protecting the membership base and the integrity of our honourable institution.

Charles: What about you? Doesn’t anybody in the club owe you any money?

Angie: Of course not. I’m not a banker and I don’t have time to look after the interests of individual members. I just look after the finances of the club as a whole.

Charles:
But you do need a haircut.

Angie: What do you mean?

Charles:
It would make you look much younger!


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