Explaining Solvency vs. Liquidity to Millennials

With all of the fiscal crises going on over in Europe, it's important to get your terminology straight. What does it mean that Ireland is having a solvency crisis compared to a liquidity crisis, for example? Ash Bennington at CNBC's NetNet has a hilarious and correct explanation of what a liquidity crisis, geared to twenty-somethings frame-of-reference. Here's the gist:

Think of it this way: A liquidity crisis is when you have to call your parents and ask them for a couple hundred bucks to help cover the rent. Short term. It's a terrible phone call to have to make. You put it off as long as you can. But while it's a pretty bad situation--there's no denying it--it could be a lot worse for you.

It gets funnier from there. Read the full story at NetNet.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Videos

Why Is Google Making Skin?

Hidden away on Google’s campus, doctors are changing the way people think about health.

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

More in Business

Just In