Courting Debt Ceiling Disaster

During the housing bust banks held mortgage debt they thought was safe. It wasn’t. In the crunch, they got scared and froze; so did the economy. If Cong fails to lift the debt ceiling the chain of events will be similar but worse as the assets will not be Frankenstein bonds made from mortgages but trillion $14.3 in US debt, the cornerstone of the global financial system. Absent that confidence the whole system collapses