Wednesday, October 8, 2008

The financial crisis, a Pokemon parable

The Financial Crisis, as Explained to My Fourteen-Year-Old Sister.

Kevin: Imagine that I let you borrow $50, but in exchange for my generosity, you promise to pay me back the $50 with an extra $10 in interest. To make sure you pay me back, I take your Charizard Pokémon card as collateral.

Olivia: Kevin, I don't play Pokémon anymore.

Kevin: I'm getting to that. Let's say that the Charizard is worth $50, so in case you decide to not return my money, at least I'll have something that's worth what I loaned out.

Olivia: Okay.

Kevin: But one day, people realize that Pokémon is stupid and everyone decides that the cards are overvalued. That's right -- everybody turned twelve on the same day! Now your Charizard is only worth, say, $25.


Leann said...

A good analogy. It's nice to hear you are making some friends Andrew. Getting reaquainted can be fun.

justLacey said...

I loved this. And guess what? Pokemon is back. Can you believe it? My son loves those and we got them for next to nothing on Ebay. Of course, he's only 7.

Rene' Morris said...

Gotta catch 'em all... Pokemon! Brilliant...however, I had no clue I was supposed to outgrow this. Wow. I'm a little upset now. :-(