Debt Takes a Holiday

We are having something of a replay of this movie in my state, Illinois, where our hedge-fund manager as governor seems to want all the state debt to be repaid in full, asap, regardless of the social cost.  This is a cutting off your nose to spite your face solution, and it really shows a lack of intelligence and creativity.  I will not otherwise invoke Paul Krugman in this piece, but one point he made during the aftermath of the housing bubble, over and over again, is that many people have the implicit belief that penance must be done in the form of economic sacrifice after having incurred a rather large debt.  This is how the Germans seemed to regard the Greeks.  Look how that ended up for Europe.  There's a lesson from that experience, if anyone cares to take a look.