Washington D.C. - Up through Wednesday, much of the debate circling around the impending debt ceiling deadline has focused on whether or not the U.S. would default on its payment obligations. However, with that moment less than 24 hours away, it is time to shift the topic to what would actually happen if the country goes into default.
CNN Money outlined a few possible scenarios.
There is the possibility of a global stock market crash. Most analysts and investors will tell you that if the U.S. fails to make an interest payment on its debt, stock markets around the world will immediately crash. Because the dollar is so important to world currency, no stock market would be fully protected.
That could trigger a global recession and a blow to the world markets that could cause an immediate economic slowdown.
Money market funds may collapse. Andrew Lo, a finance professor at MIT said that if the U.S. defaults and stock prices drop, investors will race to pull out cash from money market funds.
Also, a resulting run on the banks could see lending seize up and some financial institutions would fail.
But some house conservatives say a lack of a deal by Thursday may not be as dire as believed. They say the U.S. actually has a couple of weeks after Thursday before any bills are due.
Rating Agency, Fitch, put the U.S. on notice. Fitch says the U.S. still has a triple-A rating, the highest possible rating. But the company says the country is now on "rating watch negative" because of the looming debt ceiling deadline. That means there could be a downgrade in the near future, just like we saw with Standard and Poor's in 2008.
The markets are bracing for what investors and traders are expecting to be a choppy Wednesday as they wait on edge for Washington to strike a last-minute deal.
Some people are going to extremes and preparing for riots and looting. Others say it's just going to be like any other day, and don't expect any turmoil.