Failure Is not an Option

Those famous words, spoken by the leaders of NASA’s Apollo moon missions.

We were all transfixed by the courage and vision it took to get to the moon…and back.

This was a refusal to accept the impossible.

Yes, it was. It was also hand wringing, duplication, unimaginable expense, bloated bureaucracy, endless public flexing and posturing, credit taking where credit was not due, and smothering of credit where it was due. Yet it was also America’s, and perhaps humankind's, finest moment. So, maybe it was all worth it. Personally, I think it was!

But still. I’m troubled by America’s reluctance to allow something to fail.

Particularly when the rescue effort involves massive amounts of spending, requisite management and consulting fees, complicated bail-out structures, perhaps a few subcommittee hearings with follow-up studies and reports; and of course, a nice expense-account dinner or two at the Capital Grille. Those in the know get together and work out a plan which allows the rest of us to go into debt up to our necks; until we are all underwater and the tide inevitably goes out.

Like Warren Buffett once said, “…a rising tide raises all boats, but when the tide goes back out, we see who has been swimming naked.”

An Even Bigger “Big Short”

Remember the real estate bubble of 2008, which almost brought the world economy down? That was the one chronicled in the movie The Big Short. Would you be surprised to learn that an even “Bigger Short” is happening, right this moment? It’s a mortgage protection scheme which essentially asks hundreds of thousands of home-owning mortgage holders to surrender their skivvies, for the privilege of continuing to swim naked in what might be our retreating tide of an economy.

Here’s a link to the story: Biden’s Mortgage ‘Relief’ Fuels Higher Housing Prices. I don’t blame folks for taking this opportunity. But they are sinking underwater now. This program is not offering a choice between sink or swim. Instead, it’s sink now—or sink later.

Basically, the program offers homeowners who can’t pay their mortgage an opportunity to reduce their payments—while they continue adding on to their loan amounts. The problem is that many homeowners, particularly first time buyers, have almost no savings. The American Enterprise Institute estimates that 79% of first time buyers have less than one month's financial reserves. So if something goes wrong, or we enter a recession, these folks will sink further into debt and this subprime mortgage bubble will grow even larger. In fact, at 7.05% of mortgages over 90 days past due, this bubble is even larger than in 2008, right before the crash. And just like previous "Big Short" times, these underwater mortgages are being securitized like crazy, with investors scooping up buckets of iffy loans, with US government backed debt, just as if we had never seen this before.

Image: Monstera Production

No Need to See the Movie When You Already Know The Ending

It all reminds me of the reason my wife did not want to go see the movie Titanic. She said she already knew the story.

“The boat sinks."

Just like declaring a boat "unsinkable" does not prevent it from hitting an iceberg, assuming a mortgage scheme has no option of failure does not magically make it so.

When does a decision to outlaw failure, become itself a failure—for an entire system? How long before the drowning person, hanging on desperately to a swimmer, takes both of them down? Is it the “moral” choice to allow folks to continuously bite off more than they can chew, thus driving them into a debt they can never repay? And is it proper to support the creation of artificial economic bubbles which drive up the price (in this case) of real estate so high that even fewer people can afford homes? Some might think it’s helpful to keep people from defaulting on their debts. Others might consider us to be enablers.

Is failure NEVER an option, or is that mentality better limited to missions to the moon?

The Real Zombie Apocalypse

We see this same “failure is not an option” in the private equity world. Hundreds of "zombie" funds remain in place, charging their investors fees on baskets of investments which have lost their value. Just like with the subprime mortgage bubble of 2008 repeating itself in 2025, Zombie Private Equity funds, which were said to be about 5-7% of all PE funds in 2008, are now thought to be up to 15% of all PE funds in 2025. Like any good zombie, you just can't kill 'em.

Photo: Vintage Lenses

PE funds are made up of multiple investments, made by their investors, who generally realize that almost all of those investments are in companies which will fail for a variety of reasons. Maybe the business concept was flawed to begin with, or perhaps the execution of the business plan was not great. Sometimes management sucks, or it could even be that—in rare instances—lies are told, and money is squandered. Shit happens.

When we invest in these funds, we have to understand that failure is not only an option. It’s a near certainty for most of the individual investments within any fund or portfolio. Except, if we are lucky, a few of our investments will make it. That success and those profits will pay for all of those other non-optional failures. Yet multiple buckets of investments are still held in zombie funds around the world, which have implied (read, “made up”) value, but little real chance of recovery; but are nonetheless kept on our "failure is not an option" books. The managers get their 2% fees every year for publishing a quarterly report to whitewash the appearance of avoidance of failure. These reports may describe a list of the funds’ holdings in glowingly hopeful terms, even though the assets might be stranded, non-performing, or downright worthless.

“Nothing to see here folks...Failure is not an option!” said the zombie, on the way to the zombie fund manager's expense account dinner, with all the other zombies at the Capital Grille.

Fish OR Cut Bait? Really?

I am talking about highfalutin’ financial “strategy” here. But we can also talk about more everyday stuff, where this “failure is not an option” bullshit prevails. Do you know anybody who needs to get a divorce, but just can’t bring themselves around to it, because it would represent a “failure”? And they never ask themselves if staying in a stultifying situation might be more of a “failure” than moving on.

Or what about someone who remains in college and gets a degree in something they hate? I can’t tell you how many people I know who have earned law degrees, but would never practice law because they just dislike it so much. Full disclosure, I know a lot of people who absolutely love practicing law; and going back to law school is a dream of so many. Nevertheless, we all know folks who just ride it (whatever “ it” is) out, because course corrections feel like “failures”. As we ALL know...Failure is not an option—right?

If you read my essays, you know that in addition to my occasional blind-pig finding of good roots to gnaw on, I can also be a man of faulty ideas, a starter of things that never work out, forgetter of things that I’ve learned, rememberer of other things that are best forgotten. But what I will also admit to is being someone who somehow knows how to let go, move on, forgive.

Yes…even fail.

Put in another, more technical way: I cherish both the fishing, and the cutting of bait.

So, I will end by throwing this chum out to all y’all in hopes that some will find fish, and some will cut bait and move on. Is there anything in your own lives which you might be falling on your sword over because you are afraid of the “failure” thing? A further question: “...is the best way to get out of a hole, to just quit digging it?”

Or maybe we are all just heroically blasting off to the moon, riding on the back of a big ol’ Saturn Five rocket, screaming, “failure is not an option!”.

Maybe, but I doubt it.

© Ray Brimble and stringtheorybyraybrimble.com, 2025. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ray Brimble and stringtheorybyraybrimble.com with appropriate and specific direction to the original content.