-The rich are different than you and me.I have long been on Hemngway's side on what the rich are actually like. I went to school with future banksters, wall street hacks, and wannabe corporate titans. When I read the Wall Street Journal and the New York times, I recognize former drinking buddies and lovers in the bylines. I know these people, and for the most part they are unremarkably bright, but in no way brilliant, and in no way smarter than many of the other bright people I have met in my life. What they shared, however, was the conviction of their own brilliance and the lack of humility to act on it. These are the latter day "best and brightest" that led us into Vietnam...utterly unaware of the practicalities of guerilla war, colonialism and death.
-Yes, they have more money.
Likely apocryphal conversation between F. Scott Fitzgerald and Earnest Heningway
But there is one way that the rich are different from you and me...they have access to the highest levels of government. They can call representatives, senators, and cabinet members to find out what's coming down the road, adjusting their investing, business and lobbying plans accordingly. They don't need to be brilliant to make money hand over fist when they have insider information and influence. And that is where I get confused.
If a credit default is likely to be coming, why haven't the Dow, NASDAQ and S&P 500 crashed yet?
I've long assumed that 'corporate titans' have better access to information than I do, and have been looking to the stock market to see what they think is gonna happen. I may not want what they want, and I certainly don't think they are brilliant...but I have assumed that they simply know more than you, I or the media know.
As of right now, there has been no selloff, no crash...which would normally lead me to believe that they know something I don't. They might know that the republicans or democrats will cave at the last minute. They might know that Obama is going to mint a trillion dollar coin. Or they might know that the default actually doesn't really matter.
But what scares me is this, maybe they have become as stupid and delusional as the tea baggers.
Let's take a look at the various possibilities.
The default won't actually be that bad. As a devoted follower of Krugman...he says it will be bad, and I believe him. More-so, he ain't alone in that assessment. So this seems unlikely.
The democrats are gonna cave. Again, I just don't see this happening. If they were gonna cave, they woulda done it sooner when they were less likely to take a major hit. You don't minimize the effects of unpopular decisions by raising the stakes. Caving early is generally less damaging than making a stand and then caving.
The republicans are gonna cave. The senate republicans already have, more or less. But it is looking less and less likely that the house republicans will. And unlikely that Boehner is gonna break with the tea baggers and allow the democrats to pass the bill with some republican support.
Obama is going to mint the platinum coin. There are arguments for and against this, but whatever the case, this would lead to unpredictable court action that would make any debt issued under the platinum coin era more questionable than the debt is now. While perhaps lessening the market crash, it wouldn't stop it. There is no crash happening (as of right now), so again, this seems unlikely.
The 'corporate titans' don't actually have better access than I do, and have dramatically underestimated the potential for default. Again, this seems unlikely to me...though it is beginning to feel like the most likely of the bad choices available. Oddly, however, this one scares me about as much as any of them. I can oppose and fight a rational opponent. I know the teabaggers are not rational, but I have relied on the greed and venality of my former drinking buddies and lovers to at least make them rationally greedy and venal. They ain't brilliant, but their insider access allows them to make a shit-ton of money without being brilliant. But what if that access is gone, what if they are genuinely about to get blindsided. Sure, it will be great to watch them fall, but their fall will mean horror to the rest of us.
So, what the fuck is going on? I don't know. But I am getting increasingly concerned that the masters of the universe are about to get sucker punched...and however much I like that in theory, in practice it could get really ugly, really fast.