For months you’ve heard warnings about the Very Bad Things that could happen if Congress fails to raise the debt ceiling. U.S. government default! Market crash! Global financial crisis!
That probably feels abstract, maybe even hyperbolic. Worldwide financial meltdown? Really?
I spent recent days talking to financial market experts and former government officials about the potential fallout. I wanted to better understand the channels through which panic and losses could spread and precipitate “financial Armageddon,” as one former Federal Reserve official dubbed it. (Other phrases that came up in interviews: “nightmare scenario,” “bankruptcies that rival those in the Great Depression,” and “we might have to go back to trading beads.”)
