Having seen the $700 billion bank bailout flounder, Obama economic advisers have concluded that the best way to re-energize the economy is to engineer another bubble. 'êSpeculative bubbles are the engine of the American economy. Absent a bubble, our economy sputters,'ê Tim Geithner, Obama'ês choice for Secretary of the Treasury, recently observed, 'êSince another bubble is the only escape from a deep recession, the Obama economic team will find one,'ê he promised.
'êIt'ês not easy,'ê concedes Austan Goolsbee, Obama's senior economic adviser. 'êAfter the bust of the dot.com bubble, people don'êt trust financial assets. After the real estate collapse, people have no faith in real assets. And with the price of oil cratering, everyone distrusts commodities.'ê With traditional investments precluded, the Obama economic team is planning to create a bubble in — collectibles.
'êThe beauty of collectibles is that they have no inherent value at all,'ê Geithner explains. 'êThe problem with stocks, real estate, and commodities is that the bubble eventually collapses because prices are finally linked to real economic value. However, collectibles are like tulip bulbs. They have no economic value. Therefore, there is no limit on prices. The collectible bubble will never burst.'ê
A team headed by Larry Summers, the former Secretary of the Treasury, is charged with identifying the collectible that can become the next bubble. Summers'ê team looked at the seven collectibles that had shown the greatest price increases since 1995: These are: Beanie Babies; The Incredible Hulk Comic Books, c. 1955; Elvis Presley Bath Mats; Hopalong Cassidy Lunch boxes; Coca-Cola Glass front 12'ê Circular Thermometers, c.1960; Log Cabin Building sets; and The Three Wise Men Christmas Ornaments.
Summers discovered these collectibles had four common features. They were once common and plentiful. No one saw them having any value so no one saved them. (If I had prevented my mother from throwing out my baseball cards, the recent devastation of my portfolio would be less bothersome.) Over time they began to possess nostalgic appeal. They have no aesthetic value and, in fact, exhibit execrable taste (think Lladro Wedding Figurines.)
Next, Summers looked for a collectibles that possessed these attributes. However, the initial candidates all encountered problems. 'êWe thought WaMu stock certificates make for a great collectible bubble. They fit all our criteria, being once common and now worthless. In a few years they will have nostalgic appeal, and everything about them is tasteless.'ê But WaMu became a non-starter when Summers realized that enriching Kerry Killinger and David Bonderman was politically unacceptable.
Other potential collectibles raised problems. Condominium Wet Bars and 1950s fallout shelters presented storage problems. Organic food wrappers were contaminated. The Conference of Catholic bishops opposed Madonna CD'ês. Then, while working on the Detroit bailout, Summers stumbled on the perfect candidate — GM cars. 'êThere are millions of GM cars around today and everyone thinks they are garbage. People can'êt wait to get rid of them,'ê Summers notes. 'êThey are poorly designed and exhibit hideous taste. We have the makings of the perfect collectible bubble.'ê
Summers believes that there is no limit to collectible prices for 15 GM models: Pontiac Aztek, 2001; Cadillac Cimarron, 1994-95; Pontiac Grand Am, 1996-2003; Cadillac Catera, 1997-2000; Chevy Cavalier, 1997-1998; Pontiac Sunfire, 1997-2004; Buick LaCrosse 2000-2008; Buick LaSabre, 1995-2005; Hummer H2, 2003-2009; Chevrolet Malibu, 1998-2000; Saturn Ion, 2003-2008; Buick Terazza 2005-2006; Chevy Uplander 2004-2008; Saturn Relay minivan, 2005-2007; Pontiac Bonneville, 1992-2005.
'êEvery one of these models is atrocious — mechanically a lemon, environmentally a disaster, and aesthetically a repulsive eyesore,'ê Summers crows.
Under Summers plan, as collectible prices rise, government-assisted banks will loan collectors 100 percent of the purchase price, fueling further price appreciation and creating incalculable wealth. 'êWe will be out of this recession in six months so long as we don'êt run out of Buick LaCrosses, Saturn Ions, and Hummers,'ê Summers claims.
