Wednesday, February 11, 2009

Let them eat cake

If I were the economic czar of America, I'd pull a Marie Antoinette and tell Wall Street and other irresponsible and insolvent banks to make lemonade out of lemons or die a slow death by maintaining the status quo of stale bread and water. Wait, that analogy doesn't even hold because I believe it was the French government that gave them the stale bread to begin with. Perhaps the stale bread we gave Wall Street were the high corporate tax rates and regulations that impede their ability to thrive and survive. Regardless, I'd tell them to deal.

I've complained before about Americans coddling children to the point that they don't recognize or accept failure and thus responsibility as adults. Apparently this applies on the macro level as well. "Let Wall Street Fail" is a quick, insightful explanation of how Bernanke and Geithner (i.e. the government) are blowing it big time.
The market is light years ahead of the government problem-solvers in sorting out this mess.
The market knows what to do. Yes, that's anthropomorphizing an intangible entity, but wrap your head around it boys and girls. There's no way to aggregate enough timely and relevant information for the government to make the best buying and selling, hiring and firing, liquidating and investing decisions. This seems so fundamental that I feel like I'm banging my head against the wall. And why does no one seem to care that the stock market dips every time there is news of a bailout!? No, it's not because the bailout/buyout/stimulus isn't big enough - it's because investors DON"T LIKE THE BAILOUT! Why the media seems to blithely ignore the markets dips in conjunction with bailout news is beyond me. If I was more savvy with technology, I would try to track that and write one kickass policy brief on the media's negligent and biased oversight.


benzta said...

Unnecessary history lesson because I like history: The phrase "Let them eat cake" had nothing to do with stale bread, but rather the lack of bread. Upon being informed of widespread bread shortages during a French famine, Marie Antoinette is purported to have said that phrase out of blithe disregard to the country's economic meltdown.

In those days, bread was sold in french patisseries at a price fixed by the government. Cake (brioche), which was also prix-fixe at about double the cost of bread, and it was the rule of the land that if the bakery ran out of regular bread, the patron was allowed to buy brioche at the bread price. So Antoinette's response made sense on a superficial level, as in "Why is everyone so upset that there's no bread? The people should be happy-- now they can have the cake at the bread price."

It would have been a monumental misunderstanding of the situation if she had actually said it, but it's likely she didn't. The phrase in question supposedly dates from an administration a hundred years prior to Marie Antoinette's rule; also, she wasn't as dumb as the person who said that would've had to have been. More likely, it was mis-attributed to her on purpose to help fuel the flames of the French Revolution that eventually cost Marie her head.

Regarding your blog, yes, I agree that we should have let Wall Street fail. At first, to be honest, I was excited by the prospect of the government coming in and buying up these horribly undervalued assets at fire-sale prices and then selling them 30 years down the road at a huge profit, but of course the government is the most inefficient vehicle to do anything, so they blew their chance to possibly save Wall Street on top of providing taxpayers with a windfall at the same time. I won't be as naive next time...

Rebecca said...

I'm to the point that I figure we're going to hell in a handbasket with or without a bailout.

SO... all that to be said, lets go to hell on the economy bus instead of first class.

I'm so over the economic crisis.

Lost in Americana said...

What goes up must come down, as the saying goes. Wall St. have been making excess gains in capital at the expense of us mere mortals for years. It's time some of them faced the guillotine. That being said, it also goes for any modern day Mary Antoinettes (aka. Alan Stanford, aka. Bernard Madoff) out there who want to squander their wealth and get caught by the "peasants" for cheating their money.