I'm not the sharpest knife in the drawer, but allow me to offer the following parable:
Let's say you loaned a friend of yours $10,000. Time went by, and life wasn't going that well for your friend. He lost his job, had bills to pay – – you know the schtick.
One day he comes to you and states: "Remember that $10,000 you loaned me?" (yes, you do) "I won't be able to pay you back. So I'll tell ya what: tear up the promissory note, and I'll give you a new note for $3,000 instead. If not, I'm just going to declare bankruptcy, and you'll never see a dime of it."
At this point, besides the fact you're probably seriously reconsidering your friendship with this person, you will probably take the deal. But I ask you these two questions:
(1) How much faith will you have that your friend is actually going to make good on his new, attenuated promise, now that he's blown off the first pledge?
(2) Will you have a big party to celebrate this new circumstance, in which you've suffered a serious financial loss?
If today's market action is any guide, the answers are: (1) Plenty of faith, you betcha; (2) Oh, absolutely!
It's a strange world.
