– Credit Market Nightmare: The US Default Idea Is Going Mainstream (Business Insider, Jun. 8, 2011):
It gets really hard to play chicken when the other side isn’t afraid of crashing.
Heretofore the debt ceiling game has been characterized as exactly that — a game of chicken — with the presumption that one side would veer off the road at the last second.
But what if the GOP really doesn’t worry about crashing at all, and in fact it thinks crashing might be good?
We’ve been saying for a while how stunned we were that the idea of a technical default was gaining currency among mainstream thinkers, and now Reuters confirms it. Nobody is particularly concerned about a default. The deadlines are no big deal. As long as it’s short, they think, it wouldn’t have calamitous implications, a notion hotly disputed by just about every financial institution (including small banks).
Particularly influential on the GOP was this OpEd in the Journal by Stan Druckenmiller (the former hedge funder) calling for the default outcome, or at least saying it wasn’t so bad.
Hey, if a financial guy says it, it must be true!