Silt in the machine: the real metaphor for the Wall Street ‘bailout’

Over the weekend I watched the car-crash interview of Sarah Palin being interviewed by Katie Couric, particularly on the “bailout” of Wall Street. (The video is later. Read me first. No skipping.)

First, I wonder, why is it that people are calling this a bailout? I’d feel confident that’s not what Hank Paulson called it. Bailouts are what sinking ships need. This isn’t so much a sinking ship as machinery gumming up.

That’s what so far nobody seems to have found – a good metaphor for the reason why this money was needed. (Since they’ve now gone ahead and agreed the form, though the Today program had an American pundit saying that popular opinion – expressed through letters and calls to senators and congressfolk – is running at 40-1, 60-1 against it.

OK, so I thought about it for five minutes to try to find the metaphor for what’s going on. Here’s what you should say if you’re a presidential or vice-presidential candidate. Though obviously if you do, you’ll be nicking it from me, with all that implies.

Think of Wall Street and those companies are running a giant machine. It needs oil; but they put oil in, turn the handle, and out comes money which they can lend you so you can buy a house. There are lots of places you can put the oil in.

One day some folk came up with a formula for the oil which had a Special Ingredient. It generated more money for the same amount of oil. Fantastic! Everyone started taking advantage to lend more money out.

Then they discovered – around April 2007 – that there was a bit of a drawback to the oil. It turns to silt. Which meant that you turn the handle, and far less comes out. Pretty soon the whole machine is silted up. What Hank Paulson is proposing is to drain the machine of silt, and spend $700bn on real, proper, known-to-work oil so that the machine can get back to normal. It won’t be able to generate money at the speed that it did in those glory years – but that was false, because that was running on the silted oil. The $700bn is required to drain the sump.

But why, you say, should we reward these Wall Street people for failure? Well, hang on here – what we’re fixing is the machine. We’re not saying that you reward the operators who happily poured the new formula oil in without first checking what its long-term effects would be. They’ve got some serious explaining to do.

OK? Got that? That’s how you would explain it, I hope, to an American prime-time TV audience. And that’s by me, just thinking while driving to the station – took about two minutes. Yes, you can argue some of the particulars, but silt in the machine is the clearest way to understand that you’re not “bailing out” the bosses, you’re bailing out (if you must) the machine that ultimately funds the businesses you work for and buy from and lend from.

Now let’s see how one of the vice-presidential candidates managed:

(Two points: first, when you’ve said enough, stop talking. Second, before the interview: this is doing the classic American TV trope – “let’s have a discussion about something that you’re going to see instead of just showing you the whole thing, thus cutting up information into tiny twitching pieces, because you’re stupid, aren’t you, American TV viewer?” – as described by Kieren.)

4 Comments

  1. She said what now?

    I talk like that sometimes.

  2. A worthy try, Charles, but no banana (quite).

    They’re not fixing the machine per se – they’re using voter’s money to buy the silt, and telling them that eventually some of it will probably turn out to have been oil all along, or can be turned into oil.

    Further, the problem was that it’s a complicated old engine, and no one quite knew which bits were silted up. So the markets (er, drivers? No.) started assuming they all were. And with each bit of the machine run separately by lots of (although often the same) er, engineers (again, probably not), people stopped believing that their bit was, in the round, going to be OK.

    The engine can keep running with a whole load of silt, especially if it’s fairly evenly distributed – but when er, engineers (?) are trying to get the silt out of the bit they look after by punting it into other bits of the engine, eventually others realise their game and put up barriers. (OK, the metaphor is really falling apart at this point)

    It’s hellish difficult sorting silt from useful oil without draining the whole system, which would mean stopping the engine. And – yikes.

    Also, oil gets used; this engine gets to use the same fuel over and over again. If we could do that, a lot of greenies would be looking for something else to do. (Arguably, that’s half the problem with greenery, but that’s for another time.)

    I realise this is hole-picking subbery, and I don’t have a better answer. I think the thing about selling us the silt is a real problem, though – it means your metaphor is good for the bankers who need the cash, but not so good for the taxpayers they’re tapping for it. I’ll have a think.

  3. I don’t think people need quite so much metaphor. Most Americans are aware that six months after they took out their mortgage with their local bank it was sold on to a less friendly, much more remote third party somewhere, even if they don’t know it was called a CDO. Most Americans are also quite capable of understanding that the banks have been taking increasingly large risks with their money and that as a consequence the financial markets – and therefore the economy – is teetering on the edge of a precipice. They’re also capable of understanding that rushed legislation frequently contains stuff that turns out to be a hugely bad idea later on – and one can hardly blame them for being suspicious at the moment.

    If Warren Buffett ever wanted to be US President – which I’m fairly sure he has not now nor has ever had any interest in – this would be the moment to enter the race as a last-minute independent candidate with a promise to fix the economy.

    wg

  4. @Karl: I’m not sure you’ve got the hang of this soundbite politics thing, but I await your 30-second metaphor with interest :-)

    @Wendy: “Most Americans are aware….” You’re sure about that? On what basis? More to the point, it doesn’t matter whether they know it or not. What they don’t seem to get is that by opposing the bailout (which, having been wrangled over for a week, has rather better oversight than its original) they’re making things worse *for themselves*. True, the plan might have been a pig in a poke. But now they’re facing an absolutely empty poke.

    (Historical note: a “poke” was a small bag carried to market; you put piglets in them and sold them. You didn’t look inside because the piglet might escape. But scammers might put a cat inside; when you got home, you’d open it and the cat would come out. Hence, letting the cat out of the bag.)

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