As I wrote several weeks ago, be on the look out for those "life as we know it would not exist" moments especially since QE2 is winding down and the debt ceiling needs to be raised. And lo and behold, here it comes as we can see in this letter from the Treasury Borrowing Advisory Committee to the Treasury Secretary Timothy Geithner.
These too big to fail banks and hedge fund titans are recommending raising the debt ceiling as "any delay in making an interest or principal payment by Treasury even for a very short period of time would put the U.S. Treasury and overall financial markets in uncharted territory, and could trigger another catastrophic financial crisis." That is, "life as we know it would not exist".
Read the letter and note how in every paragraph that the world is somehow going to end if Congress doesn't acquiesce. Failure to raise the debt ceiling would be "catastrophic", "could lead to a downgrade of the U.S. sovereign credit rating", "could trigger a run on money market funds", "would spark a severe crisis", could lead to "a sharp drop in lending", "would have damaging consequences", and "would adversely impact economic growth, potentially pushing the U.S. economy back into recession".
The Honorable Timothy Geithner
No doubt the debt ceiling will be raised, and "life as we know it" will continue and the status quo will be preserved. And the free markets will be a little less free.