This can't be good

Fed just warned again about debt ceiling and having to raise it or else. Margin calls really suck.

What would the "or else" entail? HMMMMMM............?

Is it time to short?

J

At first the "or else" would comprise shifting undesignated tax revenues to paying interest to the holders of US bonds to avert missing payments.
Interest rates would likely rise.

If the condition persists the "or else" would entail manic maneuvers to direct monies already designated to be spent elsewhere to be spent as interest to US bondholders to avert missing payments.
Interest rates would likely rise, . . . further.

If the condition were to persist even longer interest payments would be missed and, perhaps, eventually non-repayment of the principle would ensue. This would be a default by the USA on its debt.
Interest rates would tend to skyrocket, . . . but no one would notice. They'd be worrying about other things.

Default would lead to a precipitant crash of the US bond market and the US dollar, followed shortly thereafter by a collapse of the US economy altogether.
As delivery of food and fuel ceases one should expect a total collapse of society. As a sage once noted, . . . "Every Country is nine meals away from chaos." In the USA so interdependent on technology and transportation chaos likely is less than nine meals away.

DonDiego wishes everyone: "Best of Luck !".

Make sure your kids or grandkids learn Mandarin.

For the Record, DonDiego does not think the US Congress will fail to raise the debt limit. jatkl99's question was of the "what if" sort; DonDiego thinks the "what if" most unlikely. No one in Congress really wants the responsibility for the collapse of America.

So DonDiego does not think "The End Is Near".

In fact, given all the tools available to extend the present conditions and pretend everything is gonna be jes' fine, . . . DonDiego is pretty sure the end can be delayed beyond the November 2012 elections. So the end is more likely than not about 2 years away.

And even then, if everything goes just right and the rest of the world decides to go along for their own good, the eventual result could be nothing more than high inflation for the foreseeable future, . . . with an accompanying persistent lower standard of living, . . . and a less frivolous society.
Not "The End", . . . prb'ly even tolerable if one gets one's mind right, . . . and one can live without casinos.

Oh, and DonDiego is certain that it's a pure coincidence that the Mayan calendar ends shortly after the November 2012 Elections too.

Wish I could afford more but for now......

Well there will be no "end". Just a continually decreasing standard of living. A reality which we are already in.
Again-make sure your kids learn Mandarin.

"Dr. Doom and Gloom, or how I learned to stop worrying and love the coming apocalypse."

Hmm, . . . that would not be a bad choice. Well-known investor Jim Rogers has been giving that advice for several years; in fact, he moved his family to Singapore so his two young daughters will learn Mandarin as they grow up.

But DonDiego is harboring some suspicions about the near-future of China. Like what are all those factories gonna do when the Wal-Mart orders vanish? And the leadership has been spending a lot of money building lots of infrastructure, . . . including full-sized small cities which are unoccupied. These presently unproductive assets may be a long time coming on-line to be productive if the US customers cut down on spending too. Oh well, at least every Chinaman who wants a job is working now.
Oh, and China is now the largest US debt-holder, still slightly ahead of the new player the Federal Reserve. When the US interest rates crater and the US bond prices tank, what's China gonna do with all those shrinking assets? DonDiego doesn't know exactly, but he expects it won't be pleasant for China and the US.

So Mandarin remains an excellent choice for one's grandkids.
DonDiego would recommend one's offspring learn Canadian or Australian maybe or whatever they speak in those 'stan countries with lots of resources. Oh, and also major in mining engineering or agricultural engineering. The new age a'dawnin' ain't gonna need near as many pencil pushers and money managers and card dealers.