Skip to main content

Default Ain't My Fault

It's not easy to get a grip on this "debt ceiling" thing, but here's a thought experiment.

Suppose you're the CEO of a corporation. In many ways, the buck stops at your desk. But, you answer to a board of directors and there are certain decisions that must be made with the consent of the directors.

Business has been tough in the recession. Though you've done your best to control costs, there are some expenses which have resulted from investment in equipment and facilities while business was brisk. Like all busniesses, you financed expansion by borrowing. The payments on the loans are still due regardless of your current business level.

The problem right now is that you're up against the credit limit that's been established. You need to fulfill current orders and to receive the revenue for these orders which will allow your business to continue, and hopefully to weather the current storm. But, you can't pay for the raw materials, front the payroll, and keep the electricity on without borrowing a bit more money. The bank is willing... but...

You go to your board of directors and half of the directors absolutly refuse to allow you to borrow more money.

You argue that without the added debt, you won't be able to fulfill the orders, there will be no more revenue, and your creditors will deem you in default. Your only recourse at that point, will be bankruptcy. Most of your employees will lose their jobs, your existing customers will go elsewhere. This will be the death knell of the business.

Our country is a really big business. None of us want to go into debt further... it truly is a crisis. We do need to raise revenue, cut expenses and control our debt. What's going on in Washington right now, though, is NOT the way to do it. It's reckless and irresponsible to talk about refusing to raise the "debt ceiling." If you believe in free market, then you have to believe that MARKET forces, not POLITICAL forces, will set our debt ceiling.

As the CEO in the fable above, when the economy improves, I will do my best to repay the debt -- the interest is a drain on our finances, and any debt limits business mobility. If a directors opposed my request to extend our credit, I would suspect that they had ulterior motives... perhaps they've invested in a competitor, or bought into a hedge fund... or maybe they're just after my job!

Comments

Popular posts from this blog

A Set of Beliefs on Interesting Questions - A Response

Just in case you're expecting Buzzfeed, Reddit, or Gawker, you're in the wrong spot. This is just a humble response -- maybe an extension -- to another humbly offered blog entry:

Big Thick Glasses Blog

I encourage you to read this entry... and to think about it. In fact, read it first -- otherwise, my blog won't make much sense.

There are no dancing babies (I really don't like the dancing babies), or cute cats (I really DO like cute cats.) But I think we spend way too much time mindlessly absorbing entertaining images and much too little time in looking inward.

I'm going to split this into two blog entries. The first, this one, will offer some extensions, challenges, and critique of BTG's (Big Thick Glasses) original post, one item at a time. The questions in this blog are BTG's. Here goes.

Have we been visited by Aliens; are UFOs alien spacecrafts?

There has not yet been credible, tangible evidence to indicate the UFOs are alien spacecrafts. Photos are invariabl…

Don't Listen -- Don't Watch -- Try READING!

I have a suggestion for both my fellow "Liberals" and my "Conservative" friends (and, yes, I do have them.) Stop listening -- don't listen to Limbaugh, Hannity, Alex Jones, Ed : Schultz, Thom Hartmann or any of the dozens of voices squawking their one sided diatribes. Switch off FOX News, CNN, MSNBC and the other thinly veiled heavily spun sources of party propaganda. I have a unique suggestion... don't listen -- don't watch.... READ!!!

Policy discussion really should have no party affiliation. There are many intelligent ways of viewing the world. None of these viewpoints can be arrived at by name calling, paranoid conspiracy theories, fear, and illusion.

For those who identiby as Liberal (Progressive or just plain Democrat), I want to suggestion these sources to better understand the intelligent Conservative Viewpoint:

1. Outside the Beltway: Self described as "...an online journal of politics and foreign affairs analysis. For the most part, our v…

How to Lead a Band - Part I

OK... I'm not Bob Wills, Woody Herman, Benny Goodman, or Johann Strauss the Elder, nor even the Younger. I'm just a seat of the pants geetar picker who start his first band at age 12, and has been at it now for 55 years. If you're reading this after 2015, then add an appropriate number of years on to that figure... I assume that if you can read, you can probably add.

I've played probably close to 10,000 gigs plus or minus, both as leader and sideman, so this blog comes from the perspective of both. I've played for as many as 25,000 people, and as few as zero... that's right -- ZERO. (I'm not sure I like ZERO, but I'd far preferred the ONE GOOD LISTENER to 25,000 inebriated idiots, just for the record.)

First, here's a few things that leaders should be aware of, followed by some things that sidemen should be aware of. If you're in a "band" and it's very democratic and no one is really the leader... enjoy your childhood. This is not …