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September 19, 2008

Wall Street: There Goes the Neighborhood


Eight-year-old T.F. Krause wanted an explanation.


“Daddy, where’s Wall Street?’


“Why would you want to know that?” I asked.


“Because I heard at school that there’s trouble there. I don’t even know anyone who lives there. Is it a bad neighborhood?”


“Yeah, you could say that. There are a lot of weird people there. They wave their arms around and wear these lab-coat type things. And throw paper around.”


“We do that in third grade too!”


“Right, it’s actually not all that different.”


“So what’s the problem?”


“Well, a bunch of people loaned money to some other people, and they probably should have known that the people wouldn’t be able to pay the money back, but they didn’t know, so they made the loans, and now the people who loaned the money are in trouble.”


“What kind of trouble, Daddy? Like what happens to me when I have to go see the principal?”


“What did you have to go see the principal for?”


“Putting papers up the air vent.”


“Why would you do that?”


“You told me that’s what you did when you were in school!”


“Oh yeah. Well anyway, it’s sort of like that. Except that they have to go see Ben Bernanke instead. They can’t get their money back, so some of them go out of business, some get bought by other companies, and some get taken over by the government. That’s the worst one of all.”




“Who would want to join the government?”


“Not me. I joined Cub Scouts. I have enough to do.”


“Me too.”


“So why did they loan people money if they couldn’t pay it back?”


“Well, it gets complicated. They thought some other people would come along and pay back the money.”


“Why would anyone do that? That’d be dumb.”


“I agree.”


“So no one else paid back the money?”




“I’m not lending anyone my money! I have $40, you know.”


“Well that’s good thinking, T.F. We’ll open a bank account for you and you can earn some interest with that $40.”


“What’s earn interest?”


“That’s when the bank pays you to leave your money with them.”


“Wait a minute, Daddy. Why would I leave my money with them?”


“Well, because it will be safe here.”


“It’s safe next to my bed.”


“Well, yeah, but it isn’t earning any interest there.”


“So they’ll pay me to leave my money in their bank?”






“Well, they’ll lend it to people who will pay them back with even more interest.”


“How do they know those people will pay them back when the people on Wall Street didn’t get paid back?”


“Uh, well, that’s a good question.”


“These banks kind of sound like dufuses, Daddy.”


“I can see your point.”


“No wonder Wall Street is a bad neighborhood.”


Eight-year-olds think they know so much.


© 2008 North Star Writers Group. May not be republished without permission.


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