Current Financial Crisis - Explained in a Story Form …

* The net asset of the country now = 3 dollars.

*A has a loan to C of 1 dollar, so his net asset is 1 dollar.

* B sold his land and got 2 dollars, so his net asset is 2 dollars.

* Thus, the net asset of the country = 4 dollars.

* B loaned 2 dollars to A. So his net asset is 2 dollars.

* C now has the 2 coins. His net asset is also 2 dollars.

* The net asset of the country = 5 dollars. A bubble is building up.

* C loaned 2 dollars to B, so his net asset is 2 dollars.

(6) Everybody has made money and everybody felt happy and prosperous.

(8) A also thought the same way.

(9) Nobody wanted to buy land anymore.

* The net asset of the country = 3 dollars again.

************ **End of the story; BUT ************ ********* ******

There is however a redistribution of wealth.

A is the winner, B is the loser, C is lucky that he is spared.

A few points worth noting -

(6) When the bubble was in the growing phase, everybody made money.

(9) The actual worth of land or stocks depend largely on psychology.

- Warren Buffett -

-Michael Ballack Ltd.-

Credit goes to: scourge, UserID: 256727