The sky is falling! Not.

With just 3 days to go until the August 2nd date for "default", and with no agreement in sight, let's take a look at exactly what will happen if no deal is reached and the credit ceiling does not go up.

First of all, despite claims from President Odrama, the US will not default on its debts. There is plenty of cash to pay our creditors. And medicare. And social security. And the military. But not all government functions will be able to keep going - in fact 40% of the federal government will shut down. Inconvenient perhaps, but not Armageddon.

Many news organizations, even Fox News, have pointed to the decline in the stock market last week as a sign that investors are concerned about the debt ceiling. As a professional working in the financial sector, I can say with some certainty that the markets are not worried that the federal government won't be able to continue spending money it doesn't have. The markets are concerned that the economy is limping along at best. Weak GDP numbers are the issue, not the debt limit.

Another theory is that investors are concerned that without a debt ceiling increase the credit rating on US debt will decline, raising interest rates across the economy. But the markets understand that a downgrade of debt is going to happen no matter what. No plan currently under consideration in congress addresses the $14 TRILLION debt problem to the satisfaction of the credit agencies. If anything, the markets are reacting to the increase in interest rates that are inevitable after years of over-spending.

So what would happen if we shut down 40% of the government and the sky did NOT fall? I think this is actually the biggest fear of the Democrats. In three days it looks like we will have an answer to that question.

The fall of Rome

I recently spent some vacation time on the west coast of Italy. In Rome, I was awed, as most tourists are, by the 2000 year old remnants of the Roman Empire: The Forum, the Pantheon, and of course the Coliseum. For a thousand years, from roughly 600BC to 400AD, Rome was the height of enlightenment, of art, architecture, technology, science and political freedoms. And then the Barbarians sacked Rome, and the Dark Ages descended.

Walking around Rome, walking around Pompeii, the shadows of that great ancient civilization stand as a warning for today: The US is at the peak of its power, at the forefront of technology, architecture, art and science. This country has been around for just 235 years, a blink of the eye on the Roman scale. Will we surpass the Romans, will we last as a culture even half as long as the Romans? Or will we repeat the mistakes of the Romans, weaken ourselves from within, and be over-run by our enemies? Given the current direction of the country, it was fairly disconcerting to see the scattered remains of a civilization that achieved even greater things in its time than we have in ours.

With that sense of foreboding imparted from the ancient ruins, my vacation next took me to Mallorca, an island off the coast of Spain. And sitting just outside the harbor of the city of Palma on the island of Mallorca, flying the American flag, was the aircraft carrier USS Enterprise – with its flight deck full of aircraft. Nothing lifts the spirits like the sight of US power floating by. We may be moving in the wrong direction at the moment, but we’re not done yet.