Perhaps a better metaphor for the current financial fiasco than the 19th century “Pyramid of Capitalism” is the classic Seussian tome, “Yertle the Turtle. “ King Yertle standing on the backs of his subject is, of course, the American and global investment classes. (Hey, nothing wrong with being king. As Mel Brooks playing Louis XIV in the classic historical documentary, “History of the World, Part I” said, “It’s good to be the King!” But not when it’s unsustainable and the entire kingdom collapses.
The American home-owning laboring classes are, of course, the straining turtle at the bottom of the pile, upon who’s back the entire shaking economic edifice is propped.
And the middle classes’ knees are shaking and about ready to give out.
Which, upon reflection, points out the potentially fatal flaw of all the financial bail out schemes being tried around the world. The AIG rescue, the $800 billion Wall Street rescue, the coordinated interest rate cuts by global central banks and hundred of billions more being used by G7 governments to buy up shares in major banks–saving Laissez Faire capitalism by socializing it—all of one theme in common. The thought is if you can just prop up ol’ King Yertle with enough billion dollar 4x4s and share support scaffolding you can keep the overextended, overbuilt global pile of anxious amphibians from hurtling to the ground.
But the turtles on the bottom still have shaking knees that are about ready to give out. And no-one is doing enough for them. Or anything, really.
Until you redistribute the weight at the bottom, shore up the foundation of the pyramid, get the middle class some mortgage-guaranteed knee braces, the turtles are gonna go tumblin’ down. More on how I think it can and should be done shortly. For a hint, start humming “Happy Holidays.”