What happens if the debt ceiling is not raised?

As the political gridlock continues in Washing, it is now sensible to ask what will happen if the debt ceiling is not raised and the US government actually has to default on its debt I am controversially bullish on the US dollar, except if the debt ceiling talks fall apart and debt ceiling is not raised by 2 August 2011. Of course, even the debt ceiling is not raised on time, the more likely outcome would probably be that the government try to prioritise its payments so that creditors get paid but not some of the others. It might be social securities, it might be other payments which got delay.

By not defaulting on creditors, the government will default on other obligations. But what will really happen if a default, albeit temporary, occurs? The most obvious response would be for everyone to dump the dollar and Treasuries, as the United States is no longer credit-worthy.

Indeed, the CDS of insuring the risk of default by the US government on its debts has surged in recent weeks and months amid the political gridlock even though yields have been falling amid a weaker economy and even scarier debt crisis in the Europe. But as far as the CDS market is concerned, a default of US Treasury securities is no longer unthinkable. Some might fear that this poses a systemic risk, as the US dollar is the reserve currency and the yields of US Treasury securities are widely used in pricing other securities.

The greatest catastrophe that Libs can imagine. They would actually have to some serious cutting in spending. Yes, things would be tough for a while.

They are not exactly rosy right now.

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.