The Sub-Prime Primer

Due credit goes to Tim Walker over at Hoover’s Business Insight Zone, for pointing out the need for a sub-prime primer. However, as the parent of a four-year-old and a four-year-old who just inherited an additional $540 billion in bailout this week (on top of the $840 billion that everyone already knew about,) I felt the need to write a primer that speaks to them.

Actually, any primer that speaks to them ought to start with an apology, followed by sentencing guidelines for the weasels responsible. With any luck, I can get my daughter to illustrate it. Without further adieu, here is the Occam’s RazR Sub-Prime Primer.

Meet Dick

This is Dick.
Dick has a nice shirt.
Dick has a nice tie.
Dick has a nice suit.
Dick owns a bank.

Meet Joe

This is Joe.
Joe has a job.
Joe wants a house.
Joe does his job and gets paid.
He puts his check in the bank.
He puts his check in Dick’s bank.

Joe’s House

Joe wants a house.
Joe does not have lots of cash.
Dick says “Hey Joe. I can give you a loan.
You come to my bank. I see your check.
I know you will pay me back.”
Joe signs his name.
Joe moves in his new house.

Meet Tom

This is Tom.
Tom wants a house too.
Tom has a check that is not as big as Joe’s.
Some days, Tom has no check at all.
Dick likes Tom, but will not give him a loan.
Dick wants to be sure he will be paid back.

Frank is in the House

This is Frank.
Frank has lots of friends. They vote for Frank, and send Frank to D.C.
Frank wants to stay in D.C., so Frank does what his friends want.
Frank thinks he’ll have more friends if he can put more people in houses.
Frank wants to put Tom in a house.

The Phone Call

Dick gets a call at work.
“Hi Dick,” says Frank.
“Hi Frank,” says Dick.
“I want you to put more people into a house,” says Frank.
“But Frank, what if Tom can’t pay me back?” says Dick.
“Too bad,” says Frank. “I will make your bank small. I will let some other Dick buy your bank.”
“But I will lose my shirt,” Dick says.
Frank says “Put Tom in a house. It will be okay.”
Frank says “My friends Fannie and Fred will help.”

Pretty Bubbles

Tom gets a house.
Jane gets a house.
Bill gets a house.
Betsy gets a house.
Everyone gets a house.
So many people want a house, that it costs more to buy a house.
Tom and Jane and Bill and Betsy all ask Dick for more money.
Dick is happy, and buys more shirts.

The Bubble Pops

One day, the shiny houses are not new.
Tom wants to sell his house.
Jane wants to sell her house.
Bill wants to sell his house.
Betsy wants to sell her house.
Now a house does not cost much at all.
But Tom and Jane and Bill and Betsy do not have the cash to pay Dick.
Dick will lose his shirt.

Pass the Buck

“Hi Frank, this is Dick.”
“Who are you?” said Frank.
“Frank, I am Dick. I own a bank. You told me to put people in houses.”
“What is your problem?” said Frank.
Dick said, “The people in the houses cannot pay me back.”
“That is too bad for you,” said Frank.
“What about Fannie and Fred?” said Dick.
“You have too many shirts,” said Frank. “All you Dicks with banks are bad, bad men.”
Dick did not know what to do.

Dick went to Tom and Jane and Bill and Betsy.
“I need my money,” Dick said.
“We don’t have any money,” said Tom and Jane and Bill and Betsy.
“Then why did you buy a house if you could not pay?” asked Dick.
“Fannie and Fred will pay you,” said Tom and Jane and Bill and Betsy.
Dick asked Fannie and Fred for help.
They said “Go see Frank.”

Bad to be a Bank

Dick still has his bank.
But Dick does not have money to help people.
Dick has no money to loan people.
Even people like Joe.
Joe has a job.
But Joe cannot get a loan to give jobs to more people.

Frank’s Friend Hank

Frank went to his friend Hank.
“Fannie and Fred need more money,” said Frank.
Hank said “What do you mean, Frank?”
Frank said “Fannie and Fred need more money to help Tom and Jane and Bill and Betsy.”
Hank said “We can’t give money to Tom and Jane and Bill and Betsy. Joe will get mad.”
Frank said “We’ll take care of all of the Joes. We’ll tell them they cannot make more jobs until we help Fannie and Fred.”
Hank said “Fannie and Fred can help all those Dicks with banks.”

Hank did not have enough money to help Fannie and Fred.
Hank went to print some more money.
Hank cannot just make money.
He has to borrow it from Joe’s children.
One day, Joe’s children will be mommies and daddies.
Their little boys and girls will have to pay it back.

Frank Stays in the House

Frank has a new house.
Frank has a new shirt.
Frank has a new tie.
Frank has a new suit.
Frank says Joe has to pay Hank, so Hank can pay Fannie and Fred, so Fannie and Fred can pay Tom and Jane and Bill and Betsy.
Frank tells his friends that Dick is to blame.
Dick loses his shirt.
Joe loses his shirt.
Hank has the bank.
Frank’s friends send him back to DC.

Now… who how much will you pay to hear my daughter recite it and illustrate it? I’m taking bids, she needs the money. Hank’s interest is piling up as we speak. Suddenly Halloween doesn’t seem as scary as it used to…

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  1. Oh, we cannot forget to tax Joe some more.

    Because we all know that if Joe would just pay more taxes, then Frank can promise Tom and Jane and Bill and Betsy that their children will have a better education even if it means Joe’s children and grandchildren will have to give up college, which is fine because we need more Franks and Hanks.

    Great post Ike!


  2. This is FAB, Ike!! I must reference in my blog so my friends will come see. Work for you?

  3. And, my daughter will help your daughter illustrate it if you like. 🙂

  4. I would *SO* love to see a Laura Grace recital and illustration of this story!!! 😀

  5. Ike, this really needs to be published as an economics parody in either young adult, or fiction, or even humor sections. In fact, I think it’s better than most of the dribble one finds in the local bookstore under humor section. Get an illustrator and get this published!

  6. Paul, any suggestions?

    My erstwhile collaborator is currently in school. And who would publish this? I’m afraid it would be too timely to survive the typical publishing cycle.

  7. A droll economist – this is so cool. You should be one of the people they interview about the economy on NPR’s This American Life.
    on the Freakonomics blog over at NYT
    Dan Pink might suggest that Johnny Bunko learn it (never too young to start,wmore people will discover in 2009)
    Rajesh Jetty should blog about it

  8. actually, i think having your daughter illustrate ALL your stories could be a key signatures, a feature of the IKE brand, the equivalent (but better) of phrases like “I am not making this up!”” which we all connect to certain authors like you know who for that one. The turkey pic is great. Get 20 of them, and you can cycle through them for the rest of your article life even after she grows up.


  1. RT BarbaraNixon Confused about the sub-prime crisis? You won't be after reading @ikepigott 's explanation at

  2. […] that everyone already knew about), I felt the need to write a primer that speaks to them.” A primer on the subprime mortgage crisis, written for the young ones. [via hoovers biz] Thursday, October 23, 2008, 11:44pm. Business. […]

  3. If you haven’t read this… you should. @ikepigott =Pithy as usual.

  4. […] just write it out. But funny pictures are good. I like informational children’s books like the ones Ike Pigott has taken to writing. I will forward tthose on along to the […]

  5. The best explanation of the bailout I’ve ever seen:

  6. […] Making the complicated simple. Posted by John in IL Filed in economics, government Tags: Barney Frank, credit crunch, Dick and Jane, mortgage mess […]