There’s an unfortunate gap today between the degree of importance of global economics and public understanding of same. Most people’s eyes quickly glaze over when they hear about sovereign debt default, banks’ liquidity crises and monetary versus fiscal policy. So it’s always a pleasure – and a great public service – when a smart person like Paddy Hirsch comes along and explains difficult concepts in ways normal people can understand them. Visuals help a lot in this regard.
Enter JP Morgan’s Michael Cembalest, Chief Investment Officer for JP Morgan’s Global Wealth Management. In a research note to clients today (9/6), Cembalest sent this representation of the European debt crisis “as seen by a 9 year old,” using Lego:
Felix Salmon shares the work, along with its key – arrows denote where each entity would shift the burden of bailout costs:
(1) The toreador in a floppy hat, and the F1 driver with his helmet, represent Spain, Italy and the rest of the Euro Periphery.
(2) The three men with helmets, shields, and medieval weaponry represent the CDU, CSU and FDP parties in Germany.
(3) The blue-and-white sailor boy is Finland. Obvs.
(4) The woman with an oversized carrot and her friend in overalls with a shovel represent theSocial Democrats and Greens.
(5) Wotan represents the Bundesbank.
(6) The piggy bank is the IMF.
(7) The grey-haired Banque chap is the ECB.
(8) The chap in the red bib is Poland.
(9) The artists are France.
(10) The angry chef, the sweeper with a broom, the airline pilot, and the rest of the motley crew at bottom left, represent EU taxpayers in Core countries.
(11) The storm troopers are the EU Commission and Euro Group Finance Ministers, chaired by Jose Manuel Barroso and Jean- Claude Juncker.
(12) The monocled banker and his assistant are EU bondholders and shareholders.
Cembalest’s comment on his instant classic:
If today’s diorama analysis borders on the absurd, so does maintaining the fiction that accumulation of massive public and private sector claims in Europe can somehow be engineered away.
Source:
“JP Morgan explains the euro crisis with lego” Felix Salmon, Reuters.com 9/6/11 http://blogs.reuters.com/felix-salmon/2011/09/06/jp-morgan-explains-the-euro-crisis-with-lego/
