داستان کوتاه

Community - VIP Mini Story

Hi, this is AJ. Welcome to the mini story and the adventures of Heva and Chim-chim, the continuing adventures of Heva and Chim-chim. Now, as you know, Heva and Chim-chim are very rich. Heva is a dog. Chim-chim is a monkey. They started a company selling salsa, making salsa and selling it and then they made it really, really big. They became super rich. They became famous. They’ve had a lot of adventures and they have remained good friends. Well, time for a new adventure.

​

One day Chim-chim is sitting around and he’s bored. He’s sitting around and he’s like I’m bored. I’m bored with this salsa business. We need to do something else.

Let’s try something else. He says “Heva, let’s buy a bank. Let’s become bankers.” So Heva and Chim-chim decide to buy a bank. They use their money and their riches from their salsa company and they buy a bank. First, they loan out $100 million dollars. So they have their bank and they give out loans worth $100 million dollars.

This is important. It’s a common mistake people make – the difference between loan and borrow, loan and borrow. So ‘to loan’ means to give money to someone. The idea is that it’s temporary. You give it to them and then they pay you back. ‘To borrow’ means to accept or get money with the idea that you will give it back.

Sometimes I hear students a lot of times make a mistake with these words. They say “Can you borrow me some money?” That’s not correct. You want to say “Can you loan me some money?” We also use the word ‘lend’. Lend is the same meaning. ‘To lend’ means to give temporarily. Can you lend me some money? Can you loan me some money? That means the person gives. So loan is giving. Lend is giving. Borrow is receiving. Got it? All right.

Chim-chim and Heva own a bank. Do they borrow money or do they loan money?

Well, they loan money to other people.

How much money do they loan to other people?

They loan $100 million dollars to lots and lots of people.

Do they borrow $100 million dollars?

No, no, no, they don’t borrow $100 million dollars. They loan $100 million dollars.

So who borrows the money?

Well, their customers. Their customers borrow money from them. So lots of customers borrowing a little bit, a little bit, a little bit, the total is $100 million.

So Chim-chim and Heva borrow $100 million dollars. Is that right?

No, no, no, they loan it. They are giving it out. They have it in their bank and they give it to people. They give. They loan $100 million dollars and, of course, they want to get the money back later.

Who borrows the money?

The customers. Individual customers borrow money.

And who do they borrow money from?

They borrow money from the bank, from Chim-chim and Heva’s bank.

How much money does the bank actually have?

Well, in fact, they only have $1 million dollars.

Heva says “How much money do we have Chim-chim?” Chim-chim says “We have $1 million dollar.” Heva says “But how can we loan $100 million dollars, that’s not possible!” And Chim-chim says “Heva, obviously you know nothing about banking. This is called fractional reserve banking. It’s very respectable.” Heva is confused.

So what kind of banking are they doing?

Fractional reserve banking.

What the hell is that? Okay, this is a term you might see if you read the newspaper fractional reserve banking. I saw it. I didn’t know what it was either, honestly, so I had to look it up. But I kept seeing it in the news and hearing about it so I thought ah, this is kind of important. Let’s learn what it is. So what it means is this.

A bank can loan more money than it has. If a bank has $1 million dollars they can actually give – loan – more than $1 million dollars. They can loan $30 million or $50 million or $100 million. There are formulas. You know it depends on the government and the laws and the rules, but they basic idea is they can give out more money than they actually have. They just write it down. That’s it. They’re kind of creating the money from nothing. This is called fractional reserve banking. If you’re an economist you probably know this, if not… It was a surprise to me, put it that way.

So what kind of banking do Heva and Chim-chim use? What kind of banking system do they use?

Fractional reserve banking.

So do they loan out more money than they actually have?

Yes, they do. They loan out more money than they have.

What is that called?

Fractional reserve banking.

All the banks in America do that. I think in Europe too, maybe all over the word.

So, again, what’s that phrase called? What’s that term?

Fractional reserve banking.

‘Fractional’ means part. ‘Reserve’ is kind of savings. So it means that the bank only needs to have a part of the money. It doesn’t have to have all the money. It can have $1 million dollars, but give loans for $30 million. They actually only have a fraction of it, a part of it.

So Chim-chim says what?

He says “Don’t worry, Heva. It’s called fractional reserve banking. No problem, very respectable.”

So Heva and Chim-chim make a lot of loans. They loan out how much money?

They loan out $100 million dollars.

Now, are these good loans to people that have lots of money that will pay them back probably?

No, they give their loans to anybody. Anybody who comes into their bank, they automatically give them a loan.

These are called subprime loans, another word you’ll see in the newspaper. I’m trying to make this topic interesting, it’s not easy. Subprime loans – ‘prime’ means like best. It means excellent. So, for example, if you eat steak or ribs, if you have prime rib, of course rib is a body part, prime rib is like the best part. It’s like the highest quality. So a prime loan would be a high-quality loan. It would be giving money to someone who’s already super rich, which means they will definitely pay you back.

‘Sub’ means below. Like a submarine, you know a submarine goes under the water, below the water, so ‘sub’ means below. So subprime means below the best, below the high quality, less than high quality. This is a banker’s way of saying bad, not so good. So the make subprime loans.

Do they make great loans or do they make subprime loans?

They make subprime loans. They give money to people who probably can’t pay the money back.

Who makes subprime loans?

Heva and Chim-chim, actually their bank. Heva and Chim-chim’s bank makes a lot of subprime loans, lower-quality loans.

Do they make prime loans, very high-quality loans or do they make subprime, lowquality loans?

They make subprime loans.

Who are they?

Chim-chim and Heva. Their bank makes a lot of subprime loans. They give money to anybody they want. Anyone who comes in, they give it to them.

They loan it to them and, of course, they need that money to come back.

Unfortunately, a lot of people default on the loans.

‘To default’ means to not pay. It means that you owe money. You borrowed money. You owe it. You need to pay it back, but you can’t. You cannot do it, so many of the people default on their loans. We use that phrase ‘default on’. You don’t default with, you default on a loan. So they default on their loans. It means they don’t pay the loans.

They’re supposed to, but they don’t. They can’t.

So who defaults on the loans?

The customers. Chim-chim and Heva’s customers default on the loans. They don’t pay the loans. They can’t pay the loans.

What do they default on?

They default on the loans.

Do Chim-chim and Heva default on the loans?

No, no, no, no, no, they gave the loans, so they don’t need to pay them back. They need to get the money back.

So who defaults on the loans?

Their customers. Their customers default on the loans. They don’t pay them back.

Heva says “Oh no, Chim-chim, we’ll be bankrupt!”

What does ‘bankrupt’ mean, bankrupt? So ‘bankrupt’ means to be without money, totally no money. It means you owe more money than you have. So maybe you have $1,000 dollars, but you owe $10,000 dollars, right? You’re below. You have negative money, maybe is a simple way to think of it. So bankrupt means negative money. You’re out of money and maybe you even owe more money than you actually have and you can’t pay it back. You need to pay $1,000 dollars this month, but you only have $10 dollars, so you’re bankrupt.

So what did Heva say?

He said “Oh no, we’ll be bankrupt!”

Was Heva worried that the bank would become bankrupt?

Yes, he was worried their bank would lose all its money. They would lose all their money.

That word ‘rupt’, I’m guessing that it probably comes from rupture, the word ‘rupture’, which means to break open. So you can imagine that you’ve got a bank and if you’re bankrupt it means the bank is broken. It’s just kind of the way to remember the meaning, a broken bank, a broken money situation. So Heva is worried about going bankrupt. That’s a common phrase. We say to go bankrupt. ‘To go bankrupt’ means to lose all your money.

So was their bank bankrupt?

Yes.

Well say is. Is their bank bankrupt?

Yes, it is bankrupt. They lose all their money. Their bank goes bankrupt.

So is Heva worried about going bankrupt?

Yes, Heva is very, very worried about going bankrupt. He’s worried they will lose all of their money.

Is Chim-chim worried about going bankrupt?

No, not at all. He says “Heva, don’t worry. You don’t understand banking. We’ll get a bailout. It’s okay.”

So bailout, if you’re watching the news you know this word ‘bailout’, bailout. The direct meaning of this word really comes from the idea of like a boat that has water. So you’d imagine you’re in a boat and it’s starting to sink. Water is coming into the boat, right? So it’s filling up, the boat is going down. So if you want to save the boat, you don’t want it to sink, you bail out the water. A ‘bail’ is like a bucket. So you have a bucket, you take the water and then you throw the water out of the boat, right? You’re bailing out the boat.

The water is coming in sinking the boat and then you’re taking the water out. Bail out the boat, bail out. That’s the direct meaning.

So when we talk about money or finances or companies it comes from this idea. The company is sinking, the bank is sinking, so usually the government will bail out, will save the bank. How do they do this? They buy the bad debts. They give money to the bank.

They save it. So it’s this idea of saving something that is sinking. Something is failing, something is sinking and then you come in and you save it. So Chim-chim says “No worries, we’ll get a bailout from the government.”

So does Chim-chim worry about going bankrupt?

No, he doesn’t worry. He thinks they can get a bailout from the government. He thinks they can get money from the government.

What is a bailout?

A bailout is kind of free money to save a company, usually from the government. The government comes and saves a company that is failing.

So Chim-chim goes to the government and says “Please, we need a bailout.” He says “Please, we need a bailout” and so the government agrees to give them $300 million dollars. The government gives their bank $300 million dollars and Chim-chim says “See Heva, we made $200 million dollars. No worries, everything is fine.” And Chim-chim and Heva are happy and they never go bankrupt.

​

And that’s the end of our mini story. As usual, listen to it, answer the questions. You need to repeat this again and again. Some of this vocabulary is a little more difficult so listen to this story more often if necessary. You might need to listen to it 14 times, 18 times, 20 times. It doesn’t matter. Just relax and eventually these more difficult phrases and words will become easy and then when you read about all the economic news you’ll be able to understand it more in English. Go watch CNN.

All right, see you again. Bye-bye.