Read the other two parts of this story at the following links:
- Eurozone Debt Crisis – Part 2 of 3 – Caricature/Cartoon of Nicolas Sarkozy as Caesar
- Eurozone Debt Crisis – Part 3 of 3 – Caricature/Cartoon of Angela Merkel the Chancellor of Germany.
Do you know what the Eurozone crisis is?
Of course it’s got to do with debt – but what’s the real story?
I know that a lot of people have tried to explain the Eurozone Crisis and have attempted to simplify it – but frankly, it’s just too convoluted to explain – unless of course, you use an analogy…or tell a story to explain the whole thing. I believe storytelling is the coolest way to explain anything to lay people like us. So here I go.
For Richer and For Poorer
(A Short Story – a Fictional Parallel of the Eurozone Crisis)
In the City of Plenty, there once lived a family. There was a man and he had many wives, and his wives had borne him many children. Some of them were daughters who were married off and were happy with their husbands, but others were sons. In the City of Plenty, there was never a problem of resources, and so all these sons were able to fend for themselves and their families; they lived in the city, they met one-another often, and they were happy.
Now three of these brothers worked hard, saved some money, invested wisely, and ensured that their families too did the same. So these brothers prospered more than the other brothers, who weren’t all that organized and whose families didn’t really follow many rules – in fact, some of the other brothers even gambled were always in debt. This went on for a while, but then the lenders became wary of them – so while the credit-rating of the three prosperous brothers was good, and whenever they needed some extra cash, people would happily loan it to them without even asking them for any interest, some of the other brothers would find it really difficult to borrow.
The father and his wives fretted about those other brothers…and so they came up with an idea and played upon the emotions of the prosperous brothers.
“Why don’t you all stay together, in the same house?” asked the father.
“But why?” asked one of the prosperous sons of this father.
“Don’t you know? If all of you live together, you’d be stronger and more powerful, and nobody would ever dare to mess with you,” answered the shrewd father.
“Okay, but why would they want to stay with us, won’t their families disapprove?” asked another of the prosperous sons.
“No. They’ve got something in it for them too,” answered the mother of one not-prosperous son.
“And what is that?” asked the most cynical of the three rich brothers.
“Well. People aren’t keen to loan them any money. If they stayed with you, people will assume that you are a family, and so they’d get the credit – and then they’d use that credit to do some business, and then they’ll become as rich and affluent as you are,” said the dad.
“Will they?” asked the wife of the most prosperous son.
“Of course, they would. They are as smart as you are – if they were given a chance, they’d prove it.”
Now one of the three rich brothers wasn’t convinced about the idea, so he said he’d wait and watch. The other two rich brothers agreed to it, and they all started staying together – in one big house, and they presented a united front to the whole city. The other brothers suddenly found themselves flush with funds. People would give these brothers money asking for little or no interest. People believed in the strength of the three rich brothers.
Unfortunately, those other brothers didn’t know what to do with the money. They hadn’t had such easy money before. So, one of the brothers took his family on a cruise, another bought a lot of apartment complexes hoping to sell them for a profit, and so on and so forth. They enjoyed the money until it was there, and then one day it was gone…and then one of the brothers defaulted on the loan that he had taken.
This wasteful brother went to the richest of all brothers and asked him for help. The rich brother helped, hoping that the brother would mend his ways. He didn’t. And then…in a few months…some of those other brothers defaulted on their payments too.
All hell broke loose when one of the rich brothers wanted some loan for a project, but he was shown the door by a lender who earlier believed in him. He was told that the city had lost faith in the family. The family now faced a collective crisis, with no simple solution in sight. Breaking up the family would result in loss of face and credibility for everyone, and financing the debt-ridden brothers would drain the resources of the rich brothers. After all, they had their own families to take care of, their own obligations to fulfill!
The richest brother who ran a tight ship, be it family or business; knew that his family will have to pay for the families of the other brothers, and he wasn’t happy about it. He was of the opinion that if the family got together and raised more debt, there had to be some sort of security that the other brothers would change their ways, work hard, be frugal, and start earning…but the other brothers felt that if they were made to do all this, they’d never have enough energy to start earning any way! Thus there was a deadlock…but then the other rich brother who had stayed in the family managed to broker a deal – whether the deal would work or not, is yet to be seen.
Now, here’s a quick quiz for you. If this story was about the Eurozone crisis, then:
- What’s the name of the family?
- Who are three rich brothers in the story?
- Who’s the brother who took him family on a cruise?
- Who’s the brother who bought the apartment complexes?
- What would be the name of the brother who bailed out the wastrel who took his family on a cruise?
- Which rich brother stayed out of the whole deal?
Here are the answers all jumbled up.
Ireland, Greece, Germany, France, Britain, the Eurozone
Important Note:
This is a fictitious story written to bring out the highlights of the Euro-crisis. I must state that the Eurozone crisis also has other roots. For instance, during 2002-8 credit was wonderfully easy to obtain, during the same period the world experienced the real-estate bubble burst (and it affected Ireland in the worst possible way), and recession hit us all – All this exacerbated the issue…and I have not drawn analogies for them in my story.
Read the other two parts of this story at the following links:
Shafali's Caricatures, Portraits, and Cartoons 