BOSTON (CBS) – I can’t believe we are still talking about this.
The Treasury Secretary says we will lose our ability to borrow money by Thursday and that the U.S. will suffer its first-ever credit default if lawmakers cannot find a deal to raise the debt ceiling.
And now that we’re approaching that magic hour it’s worth looking at what exactly will happen if it arrives.
First let me tell you that I am not a Debt Default Denier. And they do exist. You know, people who believe the administration is making all this up as a scare tactic.
But the fact is not much would actually happen Thursday. It is true that we would lose our ability to add to the national debt. But things would still appear normal, at least for a week or so, before we actually started missing payments.
Unfortunately, though, it doesn’t really matter which moment we run out of money. This is like flying too close to the sun – you can do a lot of damage before you ever get there.
Just look at what’s already happened in the financial markets. Interest rates have been rising and some big firms, including Boston’s Fidelity Investments and JP Morgan Chase, have sold all of their short-term government debt.
Because they don’t want to risk it.
Rising interest rates and a weak dollar are not good. But a crisis of confidence is far worse. If investors no longer trust America to pay its bills, you will not want to see what happens next.
Follow Joe on Twitter @joemathieuwbz
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