Budgets and Debt: The Cheshire Cat Apocalypse

by Dechert LLP

photo of Rick JonesWriting at the beginning of the week in which the government is supposed to run out of money, it's worth noting the cognitive dissidence between the political chattering classes who clogged the airways this weekend with threats of doom and other apocalyptic noise and what's actually happening on my desk. If I wasn't already numbed by the Giants being 0 and 6, it would have been really distressing. Listening to the doomsayers of the 24 hour news cycle on one hand, and returning to my desk on Monday morning and seeing the business of business humming along nicely with little energy around the ongoing government shutdown and potential debt ceiling break this week was really rather odd.

My bet is that the business world has got this right. Financial disaster is not upon our doorstep. For one thing, commerce makes real bets, i.e., money at risk, whereas the political class bets only with the exhalation of complex gasses, most notably, perhaps, contributing to climate change. I don't think I can remember a time when there was this air of unreality about something which large parts of the commentariate think is enormously bad for the country, while the rest of us mostly go about business as usual. No cat, just smile.

We’re busy here at Dechert. So, I'll continue to play the cards as they have been dealt and proceed as if the world's not ending. The data mostly does suggest that, at the end of the day we avoid existential self-inflicted wounds, one way or the other.

But before we grow too sanguine, it's worth taking a moment to think back to the late summer of 1914. Now, since that annus horriblis, hundreds of books (many of which are quite good) have been written about the origins of the Great War. Typically, the narrative begins sometime in the late 19th century and marches inexorably to the assassination of the poor Archduke; the spark that began the war in the summer of 1914. Determinism written as history. Blindingly obvious, right? Can’t miss that! But you know what captured the imagination of Europe on the precipice of war, in late July 1914? The story that engaged both the governed and the governing: Madam Caillaux's trial. Earlier that spring she quite competently shot dead the editor of Le Figaro for writing disparaging things about her husband, the French Finance Minister (which all seemed mostly true). From the Broadsheets to the Penny Press, the world was having a marvelous time wallowing in the frission of the trial of this elegant lady, a scion of French society, who calmly wacked Monsieur Calmette and then had her chauffeur drive her to the police station to surrender. The trial was sensational. The President and Prime Minister, returning from an enormously consequential meeting with the Czar, were mostly distressed that they couldn't keep up with the story while returning by steamer from St. Petersburg. Madam Caillaux was found innocent, by the way - innocent by reason of the grip of passion; for the jury, at least, apparently justifiable passion. The verdict was rendered on July 28, 1914. Her summer, one presumes, then got much better. For the rest of the world, the summer soon got very bad indeed, as the guns of August started to thunder some two weeks later.

It's always worthwhile remembering that even when we are certain things are fine, the slippery slope of the apocalypse is notoriously hard to perceive when standing upon it.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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