Tom, dick and harry in the island

Here is a small symbolic story about world financial turmoil.

There is small Island where tom, dick and harry lived. Tom and dick have each $1 and Harry own the island.
One day Tom and harry stuck a real estate deal, tom brought island for $1 from harry.
1. Tom having island worth $1.
2. Dick has $1.
3. Harry also has $1.
So, total money in island is $3. Island is a paradise with financial equality.

Now Mr. Dick started thinking and wants to buy the property. Bottom-line, tom refused to sell island without any profit. So dick borrowed $1 from harry and made $2. Hence, paid $2 to Tom and brought island.

1. Tom is having $2.
2. Mr. Harry’s fate is the $1 which dick has to give him back.
3. Though Dick having island worth two dollar, his own actual money invested in island is $1 as he have to give one dollar back to harry.
So, total money in island is $4. So you see bubble is growing big.

After all now Mr. Harry is sad, because he want island back at any cost. So he borrowed $2 from Tom and adding up the value $1 which Dick have to give, Mr.Harry brought island from Dick for $3.

1. So Tom’s value of fortune is the $2 which Harry have to give back..
2. Dick has $2 in liquid cash.
3. Harry has the island worth three dollar, but his own actual money is $1 since he has to give two dollars back to Tom.
So, Total money in island is $5.

Same way it was working like a chain of business deals, bubble was becoming big ., and every one was increasing their personal wealth one way or another and three of them were happy about it.

One day Tom has started thinking he should get his money in cash back from harry. But harry only had island with him. They started thinking how come this same island which was only one dollar now worth three dollar. Nothing has changed in island but increased price tag of island for nothing. They were slowly realizing they themselves are responsible for speculative increase of the prize.

Now nobody needs the island but their cash. Bubble is breaking. They all agreed island is originally worth for $1. Harry becomes insolvent without no other way but to give back Tom’s money, at last he had to give island to Tom and they agreed.

Now,

1. Tom’s fortune is island worth $1.
2. Dick is having $2 in cash.
3. Harry becomes insolvent.
So, total money in island is $3. Back to square one story getting over now current scores are.
1. Harry – loser of game – Loss.
2. Dick – won the game – Profit.
3. Tom is in break-even – No profit No loss.

Morale of the story – Bubbles are unpredictable, it may break at anytime, and when it breaks the winner will be the one who have liquid cash.

Cheers - catsniper