The Misguided Cult of the Bear

Over the past month I've watched journalist after journalist trot out financial expert after financial expert to describe -- in quite graphic detail -- how exactly the world will come to an end should the U.S. fail to raise the debt ceiling and miss a coupon payment. These experts, who are accomplished people with long careers in finance, engaged in an arms race to find the most sensational adjective to describe the death and destruction that would inevitably ensue in such a scenario. Then there was one particular article making its rounds in the blogs and social media. It said that, since the amount of U.S. government debt outstanding was 24x what Lehman Brothers owed its creditors, the crisis resulting from a failure to raise the debt ceiling would be 24x as bad.

Look, a technical default would not be a good thing -- I am not trying to minimize the situation at all -- but that is stupid logic. For sure, there would be some market volatility. But let's use our heads for a second and compare this with two other defaults: Lehman and Greece, which were unbelievably hard on markets. The difference is: Lehman and Greece didn't have the money. In contrast, we do!...373 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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