Economic Models Explained With Cows – 2008 Update
SOCIALISM
You have two cows.
You give one to your neighbour.
COMMUNISM
You have two cows.
The State takes both and gives you some milk.
FASCISM
You have two cows.
The State takes both and sells you some milk.
NAZISM
You have two cows.
The State takes both and shoots you.
BUREAUCRATISM
You have two cows.
The State takes both, shoots one, milks the other, and then throws the milk away.
TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income.
SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons.
AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has dropped dead.
ENRON VENTURE CAPITALISM
You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says you own eight cows, with an option on one more. You sell one cow to buy a new president of the United States , leaving you with nine cows. No balance sheet provided with the release. The public then buys your bull.
THE ANDERSON MODEL
You have two cows.
You shred them.
A FRENCH CORPORATION
You have two cows.
You go on strike, organise a riot and block the roads, because you want three cows.
A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create a clever cartoon image called ‘Cowkimon’ and market it worldwide.
A GERMAN CORPORATION
You have two cows.
You re-engineer them so they live for 100 years, eat once a month and milk themselves.
AN ITALIAN CORPORATION
You have two cows, but you don’t know where they are.
You decide to have lunch.
A RUSSIAN CORPORATION
You have two cows.
You count them and learn you have five cows.
You count them again and learn you have 42 cows.
You count them again and learn you have two cows.
You stop counting cows and open another bottle of vodka.
A SWISS CORPORATION
You have 5000 cows, but none of them belong to you.
You charge the owners for storing them.
A CHINESE CORPORATION
You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.
AN INDIAN CORPORATION
You have two cows.
You worship them.
A BRITISH CORPORATION
You have two cows.
Both are mad.
AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the **** out of you and invade your country.
You still have no cows, but at least now you are part of a democracy.
AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.
A NEW ZEALAND CORPORATION
You have two cows.
The one on the left looks very attractive.
Bravo!
What corporation is yours, Phanta?
Hmmm, that’s a very good question (makes me think).
I’d like to have an Australian corporation, but so far it’s more like Surrealism. What about you?
I’m vegetarian 🙂
And what’s the definition of that, economically speaking?
(are you really a vegetarian??)
The DJIA Model:
You have two cows.
Now you have 1.92 cows.
Now you have 1.85 cows.
Now you have 1.89 cows.
Now you have 1.4 cows.
Ah yes, but to follow the Fibonacci retracements, I think it goes like this:
You have two cows.
Now you have 1.618 cows.
Now you have 1.5 cows.
Now you have 1.382 cows.
Now you have 1.236 cows.
(Attempt at geek humor).
Sarcasticynic, did you sell any stocks before “the debacle”? Do you manage your own money or have an advisor?
Yes, I sold some in January ’08 to help pay for my Corvette, and then some about two months ago to help pay for my new pool table. Just in time, I guess.
And both. I’ve managed my own personal finances and my 401(k) for the last three decades, and now have an advisor who manages my post-retirement IRA.
That was some lucky timing, not perfect, but good enough.
And how did your advisor do in this environment? Was s/he defensive enough with the allocation?
Have you seen anything close to this market before? 🙂
Really shook me up, crazy stuff.
To be honest, the only reason I have an “advisor” is because I needed to rollover 2/3 of my 401(k) into an IRA to take 72(t) distributions. The firm I chose, which rhymes with “peril pinch,” has my steady income in Treasury Bonds and the rest in mutual funds. I don’t have the need to speak with them much. Of course, that will all change when I turn 59.5.
And no, I’ve not seen this before. Contrary to my other comment about my pulse, I’m at peace despite all this turmoil. No worries here. I would, however, be extremely upset if this had all happened when I was just about to retire.
Imagine how many boomers are close to the retirement or will be in the next few years. It’ll be a constant flow of money out of the market.
And stocks aren’t that cheap right now.
Do you / have you ever shorted stocks?
Nah, I’m not that sophisticated. Read my blog starting at the beginning to see how naive I (still) am when it comes to stocks and investments.