Does U.S. Default Spell Disaster?

President Obama is using the word "Armageddon" in describing what will happen if Congress fails to raise the debt ceiling.  Other Senators say he is wrong, that the catastrophe is that the USA keeps spending money that they don't have and pretending they can continue this pattern.

Arguments that a failure to raise the debt limit will raise interest rates, slow U.S. economic growth, increase inflation and ultimately cost the United States its AAA credit rating are all true, but they don't add up to an ultimate end-of-the-world battle. The inability to deal with something as relatively simple as raising the debt ceiling is a symptom of fiscal dysfunction in Washington that will push the U.S. further down the road to economic stagnation. But the image that comes to my mind is that of a frog cooking to death in a pot of water that heats up so slowly the frog never jumps out, rather than fire blasting from heaven to devour Gog and Magog.

What???  Can it be possible that the financial writer for msn.com jut referenced Ezekiel 38...Gog and Magog??  Yep...he did!  And then we have this paragraph:

My big worry is that the current slow erosion of faith in U.S. Treasurys will turn into a cascade of unanticipated consequences if the debt ceiling isn't raised. Treasurys play a unique role in the global financial markets. They aren't important only because they're jammed into so many global portfolios, including the portfolios of so many of the world's countries. They're also important because they serve as collateral on a huge percentage of the complex deals that use derivatives to shift risk around the globe.

What??  Did he just say that eroding faith in U.S. Treasurys could make a big mess??  So financial Armageddon IS a possibility?

It's that role that makes me think Armageddon is a possibility. It's a remote possibility, I think. But given the very limited information about these markets and the balance sheets of the players, I can't say with any degree of certainty how small the possibility might be.

See it here; http://money.msn.com/investing/would-a-us-default-mean-disaster-jubak.aspx

One must admit that this article is pretty interesting in that a major financial writer (Jubak) who writes for a major media outlet is publicly claiming that he can't rule out the possibility of cascading events leading to financial Armageddon.....he hopes it's a remote possibility....but he admits he can't say that with any certainty.

The smart men seem to be confounded....the intelligent men seem to be frustrated.  The Bible said that's how it would be in the Last Days.

Hat tip to Jared F.