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Stick figures explain current economic state
Being a constant connoisseur of pretty much any media source out there, I try to keep up with the continuous coverage of the state of the economy today.
Yet I have come to the conclusion that I’m hopelessly confused—and the more I try to understand the situation, the more I feel lost.
I’m not really sure
what the bailout numbers are up to now. I’m not totally comfortable
trying to explain stock market statistics to those who ask. To be
completely honest, I’m not sure I even understand what sparked this
financial crisis to begin with.
I was somewhat ashamed to admit that at first—but then I realized I was not alone.
Does anyone really know about our economy in-depth anymore? It seems like the articles I read now in
The New York Times, Time magazine and on CNN.com provide readers with more and more vague terms that are not really explained to the fullest extent.
I find
myself wallowing in a pile of words like “subprime mortgages,”
“economic health,” “ballooning deficits” and “recession and depression”
and I’m not quite sure how to define all those.
Anna
Quindlen wrote in the latest issue of Newsweek that John McCain
received criticism on the campaign trail for saying he did not
understand economics the way he should.
I
remember thinking at first I would probably never admit this to the
people who were about to determine the course of the presidential
election.
On second thought, though, I appreciated his honesty.
“[McCain’s]
real sin wasn’t only ignorance, but also candor, combined with the
suspicion that many of his colleagues were no better versed in the
subject than he was,” Quindlen said.
She
continues, “If the current repression—worse than a recession, not quite
a depression—can teach us anything, it’s that you can’t proceed
knowledgeably, in terms of personal finance or political judgment, in
an area you don’t really know much about.”
In a
class this week, one of my professors showed me something with the
title, “Subprime Primer: stick figures explain economic collapse.”
The
Subprime Primer is a 45-slide presentation completely made of stick
figures that explain the present economic meltdown “as the world slides
into depression.”
If you
haven’t seen it yet, definitely take the time to check it out—really,
it explains the financial crisis better than anything I have seen in
any major media source to date.
The
presentation begins with two stick figures at Ace Mortgage Brokers, one
of who wishes to buy a house, but has not saved any money for a
downpayment.
The other figure responds with, “Sure! Since the value of your house will always go up, we don’t need downpayments anymore!”
It is,
as expected, a downward spiral from there. The end result really isn’t
any end result at all—just two stick figures, one from the Norwegian
Village Pension Fund arguing on the phone about a lack of monthly
payments, and one from the RSG Investment Bank providing his simple,
three-word explanation saying they messed up.
It is
possible to understand this financial crisis if the research is done in
the right place, and it is our responsibility to do this research
because it is only when we understand the bailout bill and everything
around it that we can hold the government accountable.
“Sometimes
the most useful thing you can do is admit what you don’t know, because
what you don’t know will hurt you,” Quindlen writes in the article. “By
all means, trash AIG. But it would be best if you understood exactly
what they’d done in the first place.”
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