The financial crisis for infants
Sandeep Parekh -
Sunday, December 14, 2008 2:13 PM
Here's a funny piece on how to teach small kids about the financial crisis by Tim Harford of the 'Undercover Economist' fame.
Dear Economist,
My young son came home from school and asked me: “Mummy, what’s a credit crunch?” How can I explain this to a five-year-old?
Ms LG, London
Dear Ms LG,
Once upon a time, there was a blameless girl called Consumerella,
who didn’t have enough money to buy all the lovely things she wanted.
She went to her Fairy Godmother, who called a man called
Rumpelstiltskin who lived on Wall Street and claimed to be able to spin
straw into gold. Rumpelstiltskin sent the Fairy Godmother the recipe
for this magic spell. It was written in tiny, tiny writing, so she did
not read it but hoped the Sorcerers’ Exchange Commission had checked it.
The Fairy Godmother carried away armfuls of glistening
straw-derivative at a bargain price. Emboldened by the deal, she lent
Consumerella – who had a big party to go to – 125 per cent of the money
she needed. Consumerella bought a bling-bedizened gown, a palace and a
Mercedes – and spent the rest on champagne. The first payment was due
at midnight.
At midnight, Consumerella missed the first payment on her loan. (The
result of overindulgence, although some blamed the pronouncements of
the Toastmaster, a man called Peston.) Consumerella’s credit rating
turned into a pumpkin and Rumpelstiltskin’s spell was broken. He and
the Fairy Godmother discovered that their vaults were not full of gold,
but ordinary straw.
All seemed lost until Santa Claus and his helpers, men with
implausible fairy-tale names such as Darling and Bernanke, began
handing out presents. It was only in January that Consumerella’s credit
card statement arrived and she discovered that Santa Claus had paid for
the gifts by taking out a loan in her name. They all lived miserably
ever after. The End.
Read the original piece here.