I'm reminded of Never Cry Wolf. In recent years, DC's favorite political weapon has been the fear card. Iraq 1, 2, the war on terror, all grossly exaggerated. Greenspan and Bernacke assured us the economy was great while the Naz and housing imploded. Now, Washington has credibility problem. Americans won't buy anymore of their 'hype'. Thing is, this time, the wolf really is at the gates. If they don't raise that ceiling, this 30-year credit orgy will come to a speculator finish. Past the '08 lows. ~15% GDP contraction in real short time.... A severe Depression....The Republican house looks too fractured to get a bi-partisan bill through... I'd consider loading up on some DOTM spy puts now...
Yawn. From the same Chicken Littles. It was used to justify billions of wasted "stimulus" and bailouts in 2008. Too bad there aren't more non-brainwashed grown-ups around to call their bluff. http://www.lewrockwell.com/orig11/stockman5.1.1.html
Just remember it was fear mongering taht lead to bailout of banks and today we are no better situation with regards to too big to fail. Instead if the homeowners directly had been given some sort of loan that would have propped up the housing market to at least fair levels instead of the garbage you are seeing now. Main street is always lead into beleiving that the folks in suits and ties are smarter than them whether its the banks, congress or wall street
I've said this before in other threads: in the event Congress doesn't raise the ceiling, the Federal Reserve can - and likely will - simply print the necessary currency into existence and transfer it to the respective Federal Department to maintain funding. They did it with QE1, 2, Maiden Lane etc (print money). No reason why they won't do it here. I don't advocate it as that would make Congress irrelevant, but given the severity of the fallout, I think it's likely we'll see some sort of "emergency intervention" by the Fed.