Deus Ex Machina is the appearance of a sudden, improbable solution to a seemingly unfixable problem; the Latin phrase for "God from the machine."
The bailout plan in all of its parts, which now totals to about $1.1 trillion, is the U.S. government's Deus Ex Machina and, for the moment, seems to be working.
On Tuesday, the New York Times' front page headline read, "U.S. investing $250 billion to bolster bank industry; DOW surges 936 points." Now, first of all, 936 points is an 11.1 percent gain in the DOW average, the biggest jump in a single day of stock trading since the '30s, in itself an almost divine occurrence.
What makes this truly Deus Ex Machina, however, is the fact that pumping literally non-existent money into the economy in order to fix the financial crisis is asinine. Yet the market seems to be responding positively. The bailout was our improbable solution. The crisis is the unfixable problem.
Deus Ex Machina, however, comes at the end of a story, usually, because the device doesn't function in the real world and the longer a reader can examine it, the less reassuring it is.
What this means is that we should not breathe a sigh of relief just yet.
We do not have $1.1 trillion lying around. Throwing around massive amounts of hypothetical money does not bolster our economy. It bolsters speculation in our economy, and people who still have money invest it in a market that really has nowhere to go but up.
A lot of those people, by the way, are the people who have been bailed out by the bailout, reinvesting their bailout money in, making more money when the market rises. To recap: Having been given do-over money for dumb business, people invest in the crops of their own failure and stand to make colossal amounts of money.
The American Deus Ex Machina did not bail out our capitalist economy, but rather the system of credit that we have been taking part in for the past 70 years.
Capitalism is people buying what they have the money for. It's a simple system at its core: cash in hand for the product being sold. No cash, no hash.
The twisted thing that has grown out of capitalism, however, is a system in which we trade on credit, i.e. money we plan on making at some point. It is neo-capitalism, the illusion of cash in hand for the reality of a sold product. It's a fine system that, for now, works like a charm.
But remember that, eventually, someone always has to pay the piper.
Photo: Courtesy of Laron Fomby
