Dr. Seuss Explains The US Economic Meltdown

I’ve been researching the whole US financial crisis, and i believe i have achieved enough of an understanding to explain it in Dr. Seuss language to my european (or even american) friends who are curious what’s happening, but would like the short, simple version.

Here is that version:

The US Economic Meltdown According to Dr. Seuss:

Part 1

This is the story of Josephat Jones, who was tired of apartments, he wanted a home!

He had a small job, he had a big car, he’d only missed payments 4 times thus far.

So he marched down the street of the town of Poo-Pome, and into a bank and asked for loan.

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He met a nice man, named Smiley McHolmes, who carefully inspected Josephat Jones.

“Josephat, well, you’ve come for a loan, your credit is iffy, i want to say no

But i have a boss, Old Windbag McGrupp, who says that our bar should be lower, not up.

If we don’t give loans, or so i hear say, the market will drop, though not all the way.”

And so with a sigh he signed and some say, that Josephat’s credit grew 3 sizes that day.

So Josephat got his new house and he smiled, but alas, that’s not all, no, not by a mile…

Part 2

The Bank of Lehwamu, where Josephat Jones took out his new spiffified, spankified loan

Did not keep that loan, they did not do that, that loan would take Jo 20 years to pay back!

The bank could get all that money right now! But if Jo hasn’t paid it, you might ask then how?

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The Bank had some friends one of whom, Fannie Mae, came by just to visit at noon each Tuesday.

When Fannie would come, she’d go to McGrupp, and say “All of your loans, why I’LL buy them up!

“I’ll buy ‘em by hundreds, thousands, a score! I’ll pay some of the interest, perhaps even more,

“If Josephat’s paying you 13 percent, i’ll pay, let’s say 7 but no more than 10

“Those few extra percentiles can make me a bunch, can buy all my friends down on Wall Street some lunch!

“You’ll get your money, well most of it, now! Can i have the loans?” So McGrupp said “And how!”

And out of the bank Fannie hopped that Tuesday, with thousands of loans which to her would be payed.

Part 3

So Fannie went back, with home loans in hand, to her home far away in Big Bubble Land

In Big Bubble Land they all said “Hooray! What new loans did you bring to us here today?

“You’ve brought us now zillians, jillians, a score! The market keeps rising, money just pours!

“Who thought there’d be people still left to buy, this housing boom’s gone clear up to the sky.

“You’d think we’d run out of good borrowers some day, and the market would drop, though not all the way.

“So Fannie what loans have you brought us this day? You say lots and lots with variable rates?”

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Variable rates, my dear Reader Friend, are loans that don’t settle on just one percent

The percent could be 13, or 30, or 10, depends on the market, the weather, the Yen

When borrowers like our good friend old Jo, took out his nice mortgage, he thought even though

The rates might be high, next week they might shrink, and when he most liked them, he’d say “Stop! Ker-Plink!

My rate’s where i like it, so now on this day, I want to refinance, this time a FIXED rate!”

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So back to old Fannie, who had all those loans, but she didn’t keep them, no, on would they roam….

She took all the millions and jillians and more, and sold ‘em in bulk to investors galore!

Everyone’s buying and selling and Whee! The Market keeps growing, more high than a tree

And high’s the right word, for no one wanted down, they just kept on smoking their smoke by the pound.

Part 4

But oh my Dear Reader, I’m sorry to say, nothing can last, the good times can’t stay

Gas kept on rising, paychecks were tight, interest rates rose until one sad night

Josephat Jones, well, his variable rate, kept rising and rising, he just couldn’t pay!

“Holy Carumba! They said that this rate would fall where i liked it, not the opposite way!

“My paycheck’s not rising, but gas and my health and especially my mortgage is way out of bounds!

I can’t pay gosh darn it, i have to foreclose. This sucks, now i’m going to lose my new home!”

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And Josephat Jones, i am sorry to say, was not all alone in foreclosing that day.

Bunches more like him, thousands galore, could not pay their mortgage, no not one month more.

And so Fannie’s assets soon fell, but she said “My assets are still worth a jillian percent!

I’m still at the top of my big bubble pie! Keep buying! Keep lending! We’ll go past the sky!”

Oh yes they went upwards, but now it would seem, reality as they knew it was only a dream.

While Fannie and others (like Lehman and Fred) were blindly rejoicing, the loans were all dead.

The banks were foreclosing, homes were unfilled, their value went downwards, the market had chilled.

And all of those loans that Fannie had brayed to McGrupp to keep giving, they all went unpaid.

Those bundles of zillions and jillians of loans were not worth kabillions Dear Reader, HELL no.

Big Bubble Land, it had burst with a thud and Fannie and Lehman were face down in the mud

The market had stretched and had retched, but this day

The market it fell. This time, all the way.