We’ve just played the highest stake game of guess-the-number: The market was thinking of a number and the government was supposed to guess it. Lehman folding? Bzzzt. That’s not the number. Bailout of money market funds? Bzzzt. Think higher. $700 billion to buy toxic loans? Bzzzt. Wrong again. Buying equity in banks? Ding-ding-ding, you win!
Why wasn’t the government better at listening to the market? Did it ever ask what it should do?
That’s not the way government thinks. But it’s the way it should learn to think. There need to be systems to listen and expectations that we out here should speak. In a representative democracy, government doesn’t always need to act on what it hears. But now it can’t hear.
Government and regulation will need to be transparent and interactive in this, the Google economy.