Martin Wolf sketches a brilliant tale

A friend had forwarded this to me. I am very sure that this article would be forwarded and circulated a lot. Martin Wolf has used the ants and grasshoppers framework to describe the decisions and choices made by Asian nations – including China and Japan – to lend to America and by Germany to other European countries. Very well-written. In his story, ants lose their savings, eventually. Whether in full or partially is not made clear by Martin Wolf. Perhaps, that is the end-game for the chain of events unleashed by the crisis that originated in America’s sub-prime mortgage sector. In Martin’s tale, some ants starve to death because they do not get back what they had lent to the grasshoppers. How would they react to that prospect? Wars, any one?

Second, if this is the end-game and if it has a reasonable probability, should ants continue to lend to the grasshoppers or stop accumulating reserves to be lent to grasshoppers? Are the ants doing that? Not yet. What are the ants waiting for? Perhaps, they were waiting precisely for a column like this to goad them into action.

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One thought on “Martin Wolf sketches a brilliant tale

  1. the ants are planning to lend even more to get back what they already lent to the grasshoppers. The ants are doing the only rational thing they can do..

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