Making the Case for Default
- Posted by ppearlman
- on July 24th, 2011
There’s an addiction myth that goes something like this, “the addict needs to hit rock bottom before he can heal.”
I don’t really ascribe to the myth but I do think that in some cases there is truth to it, specifically in situations in which the addict, beneath the annihilation and mess, still has a will to thrive – still has a soul.
In such instances the bottom might bring with it a clarity and an opportunity for rebirth and growth.
We all know our government is broken. We have been sputtering for a while now and well before the Bush Gore 2000 election fiasco.
The current debt ceiling absurdity is only the latest manifestation of the disease, the latest symptom.
Let’ face it, we are junkies and our latest drug of choice is debt.
2008 is looking more and more like a false bottom. I don’t mean this in terms of the stock market. (This post is not directly about the stock market.) We faced the abyss in 2008 but the solution then was just more smack and so seeing Europe strung out now and our own political malfunction continue should be no surprise.
The adaptive solution just might be default.
For the long term health of the nation, perhaps we need to hit rock bottom; perhaps we need to not just face the abyss but to fall into it head first.
Few doubt that, come the 11th hour, our so called leaders will leave us without a compromise which averts default. Meanwhile, the contrarian in me is rooting for a complete melt down. The probability of this might be small and the near term price high, but for the long haul, finally hitting rock bottom might bring with it greater potential for renaissance.
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Phil is the executive editor of StockTwits and an investor in the company. He is a partner at Social Leverage, LLC and makes early stage investments in web based companies. (More)