18 December 2008

The subprime primer

There are times when words fail me. Not often, but there are. Fortunately, words don't fail everyone:
The Sub-Prime Primer

by Ike

Due credit goes to Tim Walker over at Hoover’s Business Insight Zone, for pointing out the need for a sub-prime primer. However, as the parent of a four-year-old and a four-year-old who just inherited an additional $540 billion in bailout this week (on top of the $840 billion that everyone already knew about,) I felt the need to write a primer that speaks to them.

Actually, any primer that speaks to them ought to start with an apology, followed by sentencing guidelines for the weasels responsible. With any luck, I can get my daughter to illustrate it. Without further adieu, here is the Occam’s RazR Sub-Prime Primer.

Meet Dick

This is Dick.
Dick has a nice
Dick has a nice tie.
Dick has a nice suit.
Dick owns a bank.
Meet Joe

This is Joe.
Joe has a job.
Joe wants a house.
Joe does his job and gets paid.
He puts his check in the bank.
He puts his check in Dick’s bank.
Joe’s House

Joe wants a house.
Joe does not have lots of cash.
Dick says “Hey Joe. I can give you a loan.
You come to my bank. I see your check.
I know you will pay me back.”
Joe signs his name.
Joe moves in his new house.
Meet Tom

This is Tom.
Tom wants a house too.
Tom has a check that is not as big as Joe’s.
Some days, Tom has no check at all.
Dick likes Tom, but will not give him a loan.
Dick wants to be sure he will be paid back.
Frank is in the House

This is Frank.
Frank has lots of friends. They vote for Frank, and send Frank to D.C.
Frank wants to stay in D.C., so Frank does what his friends want.
Frank thinks he’ll have more friends if he can put more people in houses.
Frank wants to put Tom in a house.
The Phone Call

Dick gets a call at work.
“Hi Dick,” says Frank.
“Hi Frank,” says Dick.
“I want you to put more people into a house,” says Frank.
“But Frank, what if Tom can’t pay me back?” says Dick.
“Too bad,” says Frank. “I will make your bank small. I will let some other Dick buy your bank.”
“But I will lose my shirt,” Dick says.
Frank says “Put Tom in a house. It will be okay.”
Frank says “My friends Fannie and Fred will help.”
Pretty Bubbles

Tom gets a house.
Jane gets a house.
Bill gets a house.
Betsy gets a house.
Everyone gets a house.
So many people want a house, that it costs more to buy a house.
Tom and Jane and Bill and Betsy all ask Dick for more money.
Dick is happy, and buys more shirts.
The Bubble Pops

One day, the shiny houses are not new.
Tom wants to sell his house.
Jane wants to sell her house.
Bill wants to sell his house.
Betsy wants to sell her house.
Now a house does not cost much at all.
But Tom and Jane and Bill and Betsy do not have the cash to pay Dick.
Dick will lose his shirt.
Pass the Buck

“Hi Frank, this is Dick.”
“Who are you?” said Frank.
“Frank, I am Dick. I own a bank. You told me to put people in houses.”
“What is your problem?” said Frank.
Dick said, “The people in the houses cannot pay me back.”
“That is too bad for you,” said Frank.
“What about Fannie and Fred?” said Dick.
“You have too many shirts,” said Frank. “All you Dicks with banks are bad, bad men.”
Dick did not know what to do.

Dick went to Tom and Jane and Bill and Betsy.
“I need my money,” Dick said.
“We don’t have any money,” said Tom and Jane and Bill and Betsy.
“Then why did you buy a house if you could not pay?” asked Dick.
“Fannie and Fred will pay you,” said Tom and Jane and Bill and Betsy.
Dick asked Fannie and Fred for help.
They said “Go see Frank.”
Bad to be a Bank

Dick still has his bank.
But Dick does not have money to help people.
Dick has no money to loan people.
Even people like Joe.
Joe has a job.
But Joe cannot get a loan to give jobs to more people.
Frank’s Friend Hank

Frank went to his friend Hank.
“Fannie and Fred need more money,” said Frank.
Hank said “What do you mean, Frank?”
Frank said “Fannie and Fred need more money to help Tom and Jane and Bill and Betsy.”
Hank said “We can’t give money to Tom and Jane and Bill and Betsy. Joe will get mad.”
Frank said “We’ll take care of all of the Joes. We’ll tell them they cannot make more jobs until we help Fannie and Fred.”
Hank said “Fannie and Fred can help all those Dicks with banks.”

Hank did not have enough money to help Fannie and Fred.
Hank went to print some more money.
Hank cannot just make money.
He has to borrow it from Joe’s children.
One day, Joe’s children will be mommies and daddies.
Their little boys and girls will have to pay it back.
Frank Stays in the House

Frank has a new house.
Frank has a new shirt.
Frank has a new tie.
Frank has a new suit.
Frank says Joe has to pay Hank, so Hank can pay Fannie and Fred, so Fannie and Fred can pay Tom and Jane and Bill and Betsy.
Frank tells his friends that Dick is to blame.
Dick loses his shirt.
Joe loses his shirt.
Hank has the bank.
Frank’s friends send him back to DC.

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