Show News September 9, 2011
The European Debt Crisis Explained - With Lego

With global financial markets confused and the future looking blurry, it can be tough to work out what's happening and who might be to blame. Who's responsible for what? What will happen if this or that country defaults?

We're not sure whether this chart, created by nine-year-old Peter Cembalest (with some help from his father, Michael, who is the Chief Investment Officer at JP Morgan bank) makes things clearer or not. It was part of a research presentation the elder Cembalest delivered recently on the European debt crisis. As the world's largest public company, JP Morgan has a vested interest in the outcome of the current financial situation.

Their take on things may be a little biased. But it is definitely a refreshing look at a complex situation (click for full-size image):


Each set of Lego figurines represents a different actor in the European market. The basic message of the chart is that the costs of bailing out most countries will be shifted onto the European Central Bank, and from there onto EU taxpayers. And that's not such a good thing: Michael Cembalest said in August that there's a fifty-fifty chance of a new recession.

If you're following along at home, here's who everybody is:

1) The toreador and the F1 Driver = Spain, Italy and the rest of the Euro Periphery
2) The three medieval dudes = German political parties the Christian Democratic Union, the Christian Social Union and the Free Democratic Party
3) The Sailor = Finland
4) The Organic Farmer = Social Democrats and Greens
5) The Intense Dude with the Cape = The Bundesbank
6) The Piggy Bank = The International Monetary Fund (IMF)
7) The Banque Man = The European Central Bank (ECB)
8) The Red-Bibbed Member of Devo = Poland
9) The Artists = France, of course
10) The Angry Mob = EU Taxpayers in Core Countries
11) The Storm Troopers = The EU Commission and Euro Group Finance Ministers
12) The Monocled Banker and Assistant = EU Bondholders and Shareholders



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