I had lunch with a friend, yesterday, and I came up with a pretty good metaphor to describe the current financial crisis while talking about it with her. It is the dish stacking metaphor. At the root of this crisis is a shortfall in the amount of money that the average household can afford to pay on a house. That’s real simple. Stacked on top of that is the larger shortfalls of nested securities that depended on those bottom mortgages. The shape of the financial system is, from the plate stacking perspective, all wrong. Instead of smaller amounts of money depending on the larger amount at the bottom, the plates above the bottom plate get larger and larger, until you reach the great world of the derivatives plate. The government has so far been trying to fix the problem from the top. But when a stack of plates starts to wobble, you can’t fix the problem from the top. The more you add to the top, the more the instability increases. Which takes us to the latest and greatest news from our
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