Hello world. I created this blog because I want to know how likely a US government debt default is, and what the consequences might be.
One spur to the blog's creation was a post by Daniel Drezner mocking the very idea of a default. And yet here is US Treasury Secretary Tim Geithner saying that a default could occur if the US doesn't raise its statutory debt ceiling.
The adversarial nature of US politics makes it very conceivable that the legislators will one day fail to cut a deal in time to avoid hitting the ceiling. So, what happens then - a brief default lasting only a few days, an emergency deal which permits the resumption of interest payments, and then life goes on as before, with no real change? Clearly there must one day come a time when the US starts to reduce its federal debt; let's suppose that we do get to that point without a significant debt-default crisis. How far away is that point in time? For how much longer will the US be willing to increase its debt burden; for how much longer will it be able to borrow on terms that it finds acceptable?
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