Tuesday, January 18, 2011

The financial mayhem 2008 as explained to teenager.....

There were once two brothers. One ended up running the country while the other ran the bank but the brother in charge of the bank was really the stronger of the two because all the money the country borrowed or spent required his services (at a price) and because (it was said), the taxes on his considerable profits were such an important part of the money the country needed to run; money that would be lost if ever he decided to emigrate.

Now a large storm was brewing and although the brothers, in truth, both knew that a mighty flood was inevitable, the one brother believed that his bank, like a mighty ocean liner, was too modern, too clever and too big for any storm to sink, while the other brother was afraid of the people’s reaction to such grave news. Thus it suited both neither to say nor do anything.

But the storm turned out truly to be a terrible one! So the brother in charge of the bank rushed to go and see the brother in charge of the country.

“Brother, it is a real mess and things look dark indeed. The impossible has happened! My fraternal banking brothers no longer trust me, nor I them. We all therefore demand payment at once but of course that is impossible for it turns out that we all owe another more than we can possibly hope to collect! Listen, if you will promise them that you will do anything you must – even giving me the keys to the country – then they will know that their money is truly safe and they will leave me in peace.”

They discussed what might happen if the brother who ran the country refused this request and both were appalled! So, loudly, one brother rushed out a proclamation that he would, indeed, surrender the very keys to the country if needed, as proof that his brother the banker could be trusted. This proclamation satisfied the fraternal brotherhood of bankers and before long they began to resume many of their old traditions.

But the brother in charge of the country found that the cost of cleaning up the mess left by such a great storm was far beyond the amount he had available in taxes. So this time the brother in charge of the country went to see the brother in charge of the bank.

“Brother,” said he, “We are in a real mess and things look dark indeed. Many things have been damaged or destroyed and many people in the country suffer grievously. Caring for the injured and fixing the land is costing much more than the taxes I can raise, even with your fine contribution. You must help therefore and organise for me a large loan which I will pay back later, when the country is strong again.”

Now all was once again well for the brother in charge of the bank and so he had resumed a bankers most prized tradition of all; sumptuous feasting. So he carefully lowered his diamond encrusted golden wine goblet and pushed his colossal plate of food to one side. Then turning to his brother said “And what will you give in surety for such a loan?”

“Why the keys to the country have been given to me! The very keys that vouchsafed my proclamation and gave your fraternal brothers such confidence in you, what more surety could you possibly need?” replied the brother who ran the country.

“But brother,” replied he, “You have already promised that those keys are mine! Unless you have something else to give I am afraid I cannot possibly help.”