why is a business default evidence....prima facia evidence at least ...
of a system degrading bad stream of purchases ???
consider only the event itself
not its ripples thru the chain of criss crossing obligations
on the P and R grid
ignore any knock on tip overs into default
or at least assume the knock ons peter out
long before a reflexive general contraction
in credit markets triggers itself
--- surely a fully socialized credit/insurance system
could counter ...limit... rectify .. these ripples ..eh ?---
then what about acts of default is anti social ??
in a keen sense
given chronic under demand
defaults at the worse act just like keynes buried bottles of dollars
the substance of defaults tomorrow are today a means to increase output...
and we always actually live in the now of production
can't recover idle labor hours
you can store labor power just like electric generation capacity but you can't store labor hours
an more then today we can effectively store electricity itself
maybe electricity some day
but the hours of a human life ...nope
imprudent purchases today
are a means to stretch the production system
preempt slack
tease out a bit more potential social "utility " into actual utility
the marginal opportunity cost realistically has a market value of zero
there is no bum demand crowding out better demand
yes a genrally supply constrained production system
might generate a "cost " in lost opportunity of higher market value
and yes at the margin bank credit is rationed
but once its just a bum receivable only ....
one more item sold out of some other firms inventory .....
aggregate all the firm purchases that will lead to firm defaults and deliquencies
in a month or week or quarter
added up together
for now they imply additional effective demand ..no ??
an economy of fully prudent firms would not include
this additional spritz of effective demand
the purchases and payments of the rash the stupid and the negligent
take the thought process from there
job class household default is quite another matter of course
how can we separate out the varieies of "honest" if idiotic firm defaults
from looting and deliberate long premeditate fraud ???
one can learn much that oughta be made institutionally acceptable
from a study of the late clinton equity/startup bubble
quite different lessons indeed
then those we seem to knee jerk learn from the late baby bush bubble
firms on a bender
firms gone wild
can a optimized sewt of institutions turn this to good account
much like the discovery of limited liability
socially beneficial imprudence
needs to be examined carefully
maybe defaults are a clear boundary a clear outcome of a firm that needs to change
or even get vaporized
but should we really try to minimize firm defaults ???
stygmatize honest defaulters
they paid a lot of wages ..for a while
