It’s the Friday before Memorial Day, a national holiday honoring all those who died while serving in the U.S. military. It’s also seven days before the United States hits the default wall. The reports coming out of Washington look positive, but this democratic sausage-making process is not for the faint of heart.
Winston Churchill said of democracy, “Indeed it has been said that democracy is the worst form of government except for all those other forms that have been tried from time to time….”
I’m not sure this is what Churchill had in mind, though.
I wonder what all the other brave men and women of The Greatest Generation and the generations that followed would think of our democracy at this point. My family lost one of the members of that greatest generation a couple of years ago. My father was in the Navy and turned eighteen piloting a Higgins craft during the D-Day invasion of Omaha beach. He would be and was very disappointed in how our government was functioning.
Which brings us to this artificial default crisis. We believe it will ultimately be resolved because the implications of not fixing the problem will lead to mutually assured destruction of our two political parties. But we also don’t believe the apocalyptic doom-mongering you’re seeing in many news reports about the debt ceiling is accurate, either.
To be sure, the impact of a default could be wide-ranging and incredibly damaging. It is an artificial crisis of politicians’ making. A default is no minor thing. But we also do not think it’s likely that the worst-case scenario being sold to you in the media is what will ultimately play out.
Fear sells, and it’s why so much of our social media and news feeds are filled with stories hocking it. The same is true for the debt ceiling.
If the U.S. does indeed default, it will come with significant costs. But at the end of the day, some payments will be missed. The stock market will almost assuredly get kicked in the shin, but ultimately, principal will be paid; payments in arrears will be made. If the stock market does take a haircut, this may be a buying opportunity. It will not be the end of the American financial system (as you’re no doubt reading or hearing or seeing) , but certainly our stature in the world will be diminished.
It’s imperative that we reach a deal before the U.S. defaults to avoid a massive loss in wealth, jobs, economic stability, etc. The artificiality of this crisis is deplorable. We cannot stress enough how much we’re hoping for a deal pre-default. But we want to caution that if we don’t, it’s also not the apocalyptic picture being painted to you either.
To quote Churchill again, “Americans will always do the right thing, only after they have tried everything else.”
Let’s hope we do the right thing earlier in the process.
Returning to Memorial Day, though — the world is losing members of the Greatest Generation. If you’re lucky enough to know one of these brave men or women or of other generations who served, reach out to them this Memorial Day and say, “thank you for your service.”
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