Tuesday, September 15, 2009

Indian Banking- PSU economics explained

One of my favorites from Catch-22:

Yossarian was riding besides [Milo] in the co-pilot’s seat. ‘I don’t understand why you buy eggs for seven cents apiece in Malta and sell them for five cents’
‘I do it to makea profit’
‘But how can you make a profit? You lose two cents an egg.’
‘But I make a profit of three and a quarter cents an egg by selling them for four and a quarter cents an egg to the people in Malta I buy them for seven cents an egg. Of course, I don’t make a profit. The syndicate makes the profit. And everybody has a share.’
Yossarian felt he was beginning to understand. ‘And the people you well the eggs to at four and a quarter cents apiece make a profit of two and three quarter cents apiece when they sell them back to you at seven cents apiece. Is that right? Why don’t you sell the eggs directly to you to eliminate the people you buy them from?’
‘Because I’m the people I buy them from’, Milo explained. ‘I make a profit of three and a quarter cents apiece when I sell them to me and a profit of two and three quarter cents apiece when I buy them back from me. That’s a total profit of six cents an egg. I lose only two cents an egg when I sell them to the mess halls at five cents apiece, and that’s how I can make a profit buying eggs for seven cents apiece and selling them for five cents apiece. I pay only once cent apiece when I buy them at the hen in Sicily.”In Malta’, Yossarian corrected. ‘You buy your eggs in Malta, not Sicily.
Milo chortled proudly. ‘I don’t buy eggs in Malta,’ he confessed, with an air of slight and clandestine amusement that was the only departure from industriour sobriety Yossarian had ever seen him make. ‘I buy them in Sicily for one cent apiece and transfer them to Malta secretly at four and a half cents apiece in order to get the price of eggs up to seven cents apiece when people come to Malta looking for them.’
‘Why do people come to Malta for eggs when they’re so expensive there?’
‘Because they’ve always done it that way.’
‘Why don’t they look for eggs in Sicily?’
Because they’ve never done it that way.’
‘Now I really don’t understand. Why don’t you sell your mess halls the eggs for seven cents apiece instead of for five cents apiece?’
‘Because my mess halls would have no need for me then. Anyone can buy seven-cents-apiece eggs for seven cents apiece.’
‘Why don’t they bypass you and buy the eggs directly from you in Malta at four and a quarter cents apiece?’
‘Because I wouldn’t sell it to them.’
‘Why wouldn’t you sell it to them?’
‘Because then there woudn’t be as much room for profit. At least this way I can make a bit for myself as a middleman.’
‘Then you do make a profit for yourself,’ Yossarian declared.
Of course I do. But it all goes to the syndicate. And everybody has a share. Don’t you understand? It’s exactly what happens with those plumb tomatoes I sell to Colonel Cathcart.’
‘Buy,‘ Yossarian corrected him. ‘You don’t sell plumb tomatoes to Colonel Cathcart and Colonel Korn. You buy plumb tomatoes from them.’
‘No, sell,’ Milo corrected Yossarian. ‘I distributed my plumb tomatoes in markets all over Pianosa under an assumed name so that Colonel Cathcart and Colonel Korn can buy them up from me under their assumed names at four cents apiece and then sell them back to me the next day for the syndicate at five cents apiece. They make a profit of one cent apiece, I make a profit of three and a half cents apiece, and everybody comes out ahead.’
‘Everybody but the syndicate,’ said Yossarian with a snort. ‘The syndicate is paying five cents apiece for plumb tomatoes that cost you only half a cent apiece. How does the syndicate benefit?’
‘The syndicate benefits when I benefit’, Milo explained, ‘because everybody has a share. And the syndicate gets Colonel Cathcart’s and Colonel Korn’s support so that they’ll let me go out on trips like this one. You’ll see how much profit that can mean in about fifteen minutes when we land in Palermo.’
‘Malta,’ Yossarian correcte him. ‘We’re flying to Malta now, not Palermo.’
‘No, we’re flying to Palermo,’ Milo answered. ‘There’s an endive exporter in Palmero I have to see for a minute about a shipment of mushrooms to Bern that were damaged by mold.’
‘Milo, how do you do it?’ Yossarian inquired with laughing amazement and admiration. ‘You fill out a flight plane for one place and then you go to another. Don’t the people in the control towers ever raise hell?’
‘They all belong to the syndicate.’ Milo said. ‘And they know that what’s good for the syndicate is good for the country, because that’s what makes Sammy run. The men in the control towers have a share, too, and that’s why they always have to do whatever they can to help the syndicate.’
‘Do I have a share?’
‘Everybody has a share.’
‘Does Orr have a share?’
‘Everybody has a share.’
‘And Hungry Joe? He has a share, too?’
‘Everybody has a share.’
‘Well, I’ll be damned,’ mused Yossarian, deeply impressed with the idea of a share for the very first time.


Anonymous said...

Fantastic... and clever.

- Rupa

bath mateUS. said...

good blog