Alcoholics, bar tabs, and bonds

I consider myself reasonably intelligent with a modicum of nous.  I make an effort to keep abreast of what’s going on in the world, particularly in my little corner here in Budapest. I read what I can, when I can. I ask questions. I initiate discussions. I’m not afraid to show my ignorance if I am sure of learning something by doing so. I will even own up to being irritating on occasion – following each pronouncement with a ‘but why?’ would drive any one patient enough to explain things to me to drink.

Above all, I know my limits. I will never, for instance, understand the crazy laws that threatens the closure of the Caledonia, a pub on Mozsár utca. Co-owner and friend, Zsuzsanna Bozo tried to explain it to me (bless her patience) but I just don’t get it. Why is having two bottles of the same booze open in a pub such a no-no? Why is having open bottles of booze in a kitchen when the menu clearly calls for alcohol as an ingredient a non-starter. So rather than waste any more of my limited brain cells in trying to make sense of it all, I turned my attention to less complicated matters: Economics 2012.

I was fortunate enough to meet an antipodean recently who had a handle on the whole thing and he explained it to me like this:

Imagine, Mary, that you own a bar in Budapest or in Dublin. It doesn’t much matter. You realise that virtually all of your customers are unemployed alcoholics and, as such, they can no longer afford to drink in your bar. To solve this problem, you come up with new marketing plan that allows your customers to drink now, but pay later. You keep track of the drinks consumed in a ledger (thereby granting the customers loans).

[‘mmm… what about the Government till’, I ask. He sighs: so your bar is in Dublin then.]

Word gets around about your ‘drink now, pay later’ marketing strategy and, as a result, more and more customers flood into your bar. Soon you have the largest sales volume for any bar in Budapest, sorry, I mean Dublin. You’re packed to the gills seven days/nights a week. Because your customers don’t have to pay immediately, they don’t complain when, at regular intervals, you substantiallyincreases your prices for wine and beer, the most consumed beverages.

[Got it… ]

Consequently, your gross sales volume increases massively. Now a young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets. So he increases your borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral. At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into Drinkbonds andAlkibonds.


These securities are then bundled and traded on international security markets. Naïve investors don’t really understand that the securities being sold to them as ‘AAA’ secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items forsome of the nation’s leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at your local bank decides that the time has come to demand payment on the debts incurred by the drinkers at your bar and he lets you know. You’ve no option but to demand payment from your alcoholic patrons. But they’re unemployed alcoholics and have no money so can’t pay their bar tabs. Since you can’t fulfil your loan obligations, you’re forced into bankruptcy. Your bar closes and eleven employees lose their jobs.

[Always the way – the employees suffer – same as the Caledonia!]

Overnight, Drinkbonds and Alkibonds drop in price by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the city. Your suppliers had granted you generous payment extensions and had invested their firms’ pension funds in the various Bond securities. They find they are now faced with having to write-off your bad debt and lose over 90% of the presumed value of the bonds. Your wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations. Your beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro no-strings-attached cash infusion from their cronies in government.The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in your bar.

‘Do you get it’, he asked, looking at me expectantly. I sighed… nodded… and said ‘I need a drink’.

First published in the Budapest Times 11 October 2012

Butterflies, tigers and Budapest bars

Art is making something out of nothing and selling it… or so said the legendary Frank Zappa…and I think he said it after one of his trips to Budapest. Whether it be the light features made from empty wine bottles in Köleves, the seats made from old bathtubs in Szimpla kert, or the complete interior remake from someone else’s trash in Csendes, the Hungarian ability to make something from nothing is artistic simplicity at its best.

I had the (mis)fortune to be in Alaska when the Celtic Tiger took up residence in Ireland. Happily ensconced in my log cabin, hundreds of miles from the nearest city, I was quite oblivious to its antics. Ireland had practically full employment; GDP was growing in double digits on a yearly basis; and for the first time in living memory, emigrants were returning in their droves. And I missed it all. While I was living off Copper River reds, frying up moose-burgers and chewing my way through last-season’s caribou jerky, Ireland was wining and dining in Michelin-starred restaurants, gorging herself on oysters and caviar, and becoming all too familiar with Dom Perignon and Ms Bollinger. And I was happy for her. Her day had come.

Pubs with soul

Before the Celtic Tiger was born, you could find pubs in Dublin where floors were covered in sawdust and used as ashtrays; where granny’s hand-crocheted anti-macassars decorated flea-ridden sofas whose patterns had long since faded into oblivion; where grandfather clocks signaled closing time. Pubs where musicians on their fiddles and tin whistles and bodhráns lulled us merry punters into a happy melancholy, providing a soundtrack for the heady Guinness-fuelled opinionating on everything from the state of world politics to the odds of Dublin winning yet another All-Ireland final. Pubs where elderly couples sat in companionable silence, having said all there was to say and the boys in the back played the odd hand or two of cards for a few quid to carry them over till payday. Back in the day, before the Celtic Tiger, pubs in Ireland’s capital had soul.

Everything measured, everything matched

But as the Celtic Tiger grew into an all consuming monster, the slow death of tradition began. I know we welcomed it with open arms…and who could blame us? After so many years of playing second fiddle to other EU states, it was time we had our turn on the world’s stage, and we relished it. But at what cost? Old pub interiors were gutted and replaced with shiny new wood and brass fittings. Quirkiness was replaced with more of the same. Designer candles took centre table. Cocktail menus offered screaming orgasms, sex on the beach and long slow comfortable screws up against the wall. Everything was measured; everything matched. Yes, the price of a pint had gone through the roof but sadder still, that witty deconstruction of the week’s events had been replaced by a dreary discourse on the price of property. With the smoking ban in place, smirting (smoking and flirting) outside in the freezing cold was nonetheless much better craic than staying indoors to be browbeaten by loud piped music and tales of killings made on the stock exchange.

A Magyar tigris

I moved to Budapest for many reasons and for no particular reason at all. Perhaps I was hoping to get in on the földszint of what I was sure was going to become another European success story. To see first-hand what happens when EU money swells the coffers of a relatively impoverished nation; when foreign investment wipes out unemployment; when talented emigrants return to the fold bringing with them a new perspective; when non-nationals flood to the country, armed with exotic languages and spicy foods. But now, two years later, there’s ne’er a sniff of a Magyar tigris. The only black and orange creature I’ve seen here is a butterfly. And when I sit in one of the many ruin pubs in Budapest, I give silent thanks.

I dare not say aloud what I am thinking. Selfishly, I want the bars in Budapest to stay as they are. The collection of random furniture; the smoke-filled rooms alive with animated, intelligent conversation where music accompanies thought rather than drowns it out; long tables scattered with half-smoked boxes of cigarettes and novels in many languages; people moving effortlessly from Hungarian to English to German so that everyone is included in the conversation, the toe-tapping beat of gypsy jazz. Nothing matching; nothing measured; everything unique.

And then I look across the road and see the shiny modern interior of a new pub through huge, brightly lit windows…and the smudge on the glass looks remarkably like a paw print.

This article was first published in the Budapest Times 12 October 2009