The Kibble Bubble

A Colbert Report re-run about the financial crisis has just ended, so I turn the tv off, grab my jacket and the leash, and head out for a walk with the dog. She's oddly pensive as we head up the street. After a little while, she stops and asks, "What was that all about?"

"All what?"

"All that 'crisis' and 'bailout' stuff. It sounds scary."

"Well, a bunch of banks made a bunch of really bad loans, and people have lost a lot of money."

"I got that," she says. "I may be a dog, but I'm not stupid. I'm asking how they lost a lot of money."

"Well, it's complicated, but I'll try to explain. Let's say you have a whole bunch of kibble--"

"How much kibble?"

"I don't know. A lot. Fifty cups."

"Oooh! I like how this starts." She wags her tail excitedly.

"You won't like how it ends. Let's say you have fifty cups of kibble, and the Weimaraner across the streets comes and asks you to loan her one cup, and promises to pay you back five cups over the next year. Do you give her the kibble?"

"No! It's my kibble!" She looks offended at the very idea.

"It's only one cup, and she'll pay you back five."

"Yeah, but I don't trust that dog. Where's she going to get five cups of kibble? She's just going to eat the one cup, and I'll never get paid back. She's a bad risk."

"Exactly. Now, imagine that some human comes and offers to sell you a piece of paper for ten cups of kibble, and the paper says you get fifty cups of kibble over the next year. Do you buy it?"

"Sure. Humans have lots of kibble. They're good for it."

"You might think that. The thing is, the paper says that some human gave ten different dogs-- the Weimaraner, the two Yellow Labs on the next block, that beagle around the corner, a bunch of others-- some human gave each of them one cup of kibble, and they promised to pay him back five cups over the next year."

"But it's the human giving me the kibble, right?"

"No, the dogs are. They promise to pay whoever has the paper. The human just sold you the paper."

"Well, that's not so good. But as long as the human vouches for the dogs, I guess it's not too bad a risk."

"The thing is, he doesn't know any of the dogs. He bought the paper from somebody else, who bought it from somebody else, who bought it from a dog somewhere, who made the original loans."

"Wait a minute. Why on earth would anybody do that? You can't trust any of those dogs to give me back my kibble."

"Well, the theory is, if you put ten dogs together, they might not all pay you back, but as long as some of them do, you can get back the kibble you started with. If you get lucky, and they all pay you the kibble they owe you, you've got almost a hundred cups of kibble."

"That sounds good. So am I a lucky dog?"

"Of course not. You can't trust those dogs, and none of them can give you any kibble."

"Oh." She looks sad. "Well, ok, then I'm out ten cups of kibble. That's bad, but I've still got..." You can see the wheels turning as she struggles with the math.

"Forty cups left."

"Thank you. Forty cups left. That's not too bad."

"Right, except you wanted to get a lot more kibble, so you went and borrowed another fifty cups from some other dog, and promised to pay her back a hundred cups."

"Why would I do that?"

"Because you're greedy."

"Well, why would she give me the kibble?"

"Because you had forty cups, and showed her a piece of paper saying that you'd get fifty more in the next year."

"But those bad dogs didn't give me my kibble."

"Right, so instead of having forty cups of kibble, you have minus sixty. You owe some other dog sixty cups of kibble that you don't have."

"Well, that sucks."

"Exactly. That's the financial crisis, in a nutshell."

"So what's the bailout?"

"The bailout is that I step in, as your owner, and give you the hundred cups of kibble you need to pay off the dog you borrowed from."

"Oh! That's good." She wags her tail. "This is why we love you."

"Thanks. The problem is, because I had to spend money buying kibble to bail you out, I no longer have the money to buy you squeaky toys."

"But... but... but..." she's really flustered. "But I like squeaky toys! I like kibble! I want my squeaky toys and kibble!" She's about to melt down completely.

"Take it easy. Your squeaky toys and kibble are safe. This is all just a hypothetical."

"Oh." She calms down a bit. "So, hypothetically, who's to blame for all this? I bet it's that Weimaraner. I never did trust that dog."

(For the record, the dog in question is perfectly nice, and has very nice owners. I have no idea why Emmy dislikes her so much.)

"No, it's not her fault."

"But she borrowed kibble she couldn't pay back!"

"Yeah, but Alan Greenspan told her it was a good idea, and she believed him."

"Who's Alan Greenspan?"

"Another human. He's... a veterinarian, and takes care of a lot of dogs."

"Oh. Well, what about the human who sold me the paper? It's all his fault, isn't it."

"Not really. He bought the paper from somebody else, and trusted them when they said it was a good investment."

"So, it's the dog who made the initial loans, isn't it? Let's find him and bite him."

"He might be the right one to blame, but nobody remembers who he was. And anyway, he had a mathematical model that said the whole thing would work out. It was very complicated"

"Oh. Complicated math is very convincing to dogs."

"Also bankers, more's the pity."

"So there's nobody to bite? We're out all this kibble, and there's nobody to bite?"

"Nope. At least, nobody we can identify easily. All we can do is buy more kibble, and hope for the best."

"Hmmph." She looks dissatisfied, and we walk in silence for a while. "You know what? I bet it was a cat."

"A cat?"

"A cat. Whenever there's a crisis, and kibble goes missing, there's a cat at the bottom of it somewhere."

"That's an... interesting theory."

"You should see if any of these bankers are cats. I bet one of them's a cat. That's who you should blame."

"I'll be sure to pass that on to the appropriate authorities."

"Good." And, with the nation's financial problems solved, we continue on our walk.

(We're currently in the middle of a fundraising drive for DonorsChoose. My goal for the challenge amounts to about $3 per daily page view on the blog. If you feel that you have gotten $3 worth of entertainment or information from this post, please consider visiting my challenge entry and making a donation.)