This is a long post but worth the read, having as it does basic insights into the intractable problem that remains the elephant in the living room with respect to discussions of “what is to be done”: unpayable debt.
The post is also noteworthy for its “12 recommendations” that include just letting it all “play out”, which in context means something along the lines of “Let’s liquidate all the unpayable debt.”
Mish Shedlock is not a lawyer. I’m not sure he’s even a trained economist. But he is a very smart guy.
Like so many, though, he seems to have this blind spot. When it comes to the process of “liquidation” you are talking about lawyers and judges and courts and judgments and enforcement at that point. You’re talking about legal processes. When you talk about legal processes it is best to talk to a lawyer, not an economist.
At the bottom, the foundational level, law and economics meet. And as I’ve said many times law trumps, though economists chafe at this.
As I’ve also said many times, “liquidation” of all the unpayable debt in the system is a practical impossibility. It is never, ever going to happen. People rightly point out that the jubilee amendment is never going to happen either.
But let me give you another certainty, though perhaps it is meaningless: as between the two – that is, the jubilee amendment or a liquidation of all unpayable debt – the jubilee amendment will happen. That’s how ridiculous the notion of liquidation is.