December 20, 2009
My Half-Baked Bubble
“SARDINES are better than candy,” my father said. “They’re oily, but nutritious!” Easy for him to say. I was 8 and had just moved to a new, fancier school. The socioeconomic shift was most apparent to me in the cafeteria, where there was a wide disparity between my lunch and everyone else’s. Ours was a Spartan household: no chocolate, cookies or extraneous sugar. For us, Rice Krispies cereal was supposed to be some kind of special indulgence.
My childhood happened to coincide with that historic moment in the early ’80s when the full ingenuity of modern science was brought to bear on lunch snacks. Fruit roll-ups had just hit the scene.
My dad was a physicist, so I thought he should know the formula for turning our flavorless Rice Krispies into Rice Krispie treats. And yet he packed me the same lunch day after day: one peanut butter and jelly sandwich, one apple, one box of raisins. When I complained, he solved the problem (and taught me a lesson) by giving me sardines instead. As if that was an upgrade.
So I became the weird kid in the corner, opening a tin of sardines, like a hobo — when I managed not to lose the key, that is. “Stick with sardines,” my dad said. “Cheap sweets are empty promises.”
But they didn’t seem so empty to me. Every day at lunchtime the cafeteria turned into an informal marketplace. My classmates laid out their wares on one of the big tables, displaying a panoply of forbidden processed delights. While I was busy trying to open my indestructible sardine can with a sharp rock, a brisk trading economy was under way.
“I am so bored with my Chunky,” a luckier boy would say, considering the options before him. “Maybe I’ll give Mr. E. L. Fudge a try!” And with a quick swap, the deal was done.
I must admit, it was a fairly efficient market. Everyone got what he wanted. Except for me. My sardines had zero value as trading currency. With no way into this economy, I had to watch from the sidelines.
Until one day, out of the depths of my isolation, I developed what you might call a creative business prospectus.
I’m not sure how I came up with this idea, but what I told my classmates was this: my mom is an expert baker, and at the end of the year she always bakes this incredible cake, the best cake ever, for me and my best friends at school. It’s coming, this wonderful cake. Can you picture it in your mind? It will be a great day. But in the meantime, I said, I will let you in on this special opportunity! If you give me, say, your Cheetos now, you can stake a claim on this fantastic pending cake. Like a deposit. One Hostess cupcake equals one share.
Just like that, I became a market maker, peddling delicious cake futures.
And people were buying! First came a round of vanguard investors. Then others followed, figuring they had to get in on the ground floor with this cake deal. From there it went wide. My table in the lunchroom became the hot new trading floor. The bell would ring and my classmates would line up with their items, eager to buy in.
At the beginning, of course, I figured I could really persuade my mom to bake such a cake, and so I’d dutifully record all the trading “transactions” in my Trapper Keeper. Twinkie = one piece of cake. Chunky = half-a-piece. Fruit roll-up = two pieces. Watermelon-flavored Jolly Rancher?! I don’t even want that. Zero pieces! I was setting the terms! It was like a dream come true.
Soon enough, however, the market was spiraling out of control. I started allowing customized cake shares. My Trapper Keeper ledger kept growing, and getting more complicated. The records described a wildly fantastic cake: hundreds of layers, rising to the heavens in all different flavors — chocolate mousse on top of meringue on top of half angel food and half red velvet. I was drunk with power, the creator of a bizarre lunchroom derivatives bubble.
Had anyone thought about it, it would have been clear that my mother, no matter how skilled a baker, could not fulfill my debts. But no one thought about it. We were all in too deep. I had to let the ledger keep growing.
The thing was, we all wanted to believe in this cake. For my investors, it was pragmatic: people were already into this cake for, like, 14 bags of Doritos, and they couldn’t just walk away from the whole idea. So they kept pouring more Doritos in and hoping for the best. Even I sort of believed in it — and I could see the numbers. I too was deluded, imagining the hero’s welcome I would receive when my mom and I eventually wheeled this amalgamated baked colossus into the schoolyard. I couldn’t face the truth.
This was the mutually reinforcing psychology that allowed the cake futures market to continue. Just like the Dutch tulip mania. Or the
The answer, as we all know, is yes — there is something wrong with that. Like all bubbles, mine couldn’t last forever. Eventually, someone was going to blow the whistle.
Spencer. Spencer was both good at math and jealous; he’d always done well by the original cafeteria economy. Since everyone had been lured over to the fancy new derivatives guy, the old trading table had sat empty, and it was Spencer, Mr. Fundamentals, who did a back-of-the-napkin calculation to demonstrate how irrational our exuberance was. If you look at the numbers, he pointed out, my cake would defy the laws of physics.
At first no one wanted to believe him. If Spencer wants to be left out of the glorious new cake era, everyone thought, then, hey, fine by us. But then Spencer won a few people over with his sober analysis. And then a few more. And just as quickly as confidence in the cake was built, it eroded. We crossed the crash threshold and, overnight, belief in the cake evaporated. My classmates knew that the ledger was a sham, and they were not getting their investments back. The Fritos, Nutter Butters, Hostess pies — they were all gone, good snacks after bad.
The bigger the bubble, the harder the fall. I was an outsider before, but now I was a pariah. The old snack economy quietly rebuilt itself, and I was back to knocking my sardine can against the monkey bars out in the playground.
When my dad found out about my mischief, I got a lecture. It was one big “I told you so,” because, well, he had told me so. “Stick with the sardines,” he’d said. “Cheap sweets are empty promises.”
Joshuah Bearman is a writer.
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"The master class has always declared the wars; the subject class has always fought the battles. The master class has had all to gain and nothing to lose, while the subject class has had nothing to gain and everything to lose--especially their lives." Eugene Victor Debs