The likelihood of a U.S. debt default is higher than ever. Deutsche Bank estimates a 2% chance while Moody’s estimates 10%. While it’s absurd to come up with precise probabilities for an insanely unpredictable outcome, anything north of zero is a sign we’re headed for a rocky ride.
If default occurs, the outcome will be disastrous. The only thing we know for sure about great cataclysmic financial events is that they always have unintended, unforeseen consequences that blindside the economy in the most surprising ways. Regardless of what we can’t see yet, we can see enough to know it won’t be pretty.
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