Thursday, October 10, 2013
The real cost of shutdown/default
Everyone is busy calculating the current and possible future costs to the shutdown and possible default.
The biggest cost by far is the damage to Trust that Americans have in their institutions and in each other. Especially those of opposing points of view. And no matter what your point of view there's guaranteed to by at least 250.000 million other whining, coniving, dirty low down traitors who disagree with you.
That's a lot of people not to trust. And even those who agree with you on some things are probably not to be trusted on other major concerns.
And the Banks, and the Government, and the Entitlement Freeloaders (those who enjoy those other entitlements, not the ones you enjoy), and the Unions, and the Teachers, and Wall Street Traders, and the Immigrants, the insurance companies and, oh yeah, the terrorists. Who can trust any of them?
Lots of people to mistrust.
It's tough to quantify trust. But certainly the shutdown has damaged it in a major way. And certainly a default - even if it were to be resolved fairly quickly - would go a long way towards destroying trust - what little is left - in this country - and abroad.
The problem with this is that every financial transaction is entirely dependent on Trust. Even those done under iron clad contracts. The paper means nothing without trust. Nothing.
If you had to open a carton of crackers and check inside, just to make sure there were crackers in it - and they weren't rotten - before buying, you just wouldn't bother to buy crackers anymore.
Same thing with stocks, bonds, mortagages etc.
Finance runs 100 percent on trust. Damage it, and you've damaged the core of our financial system