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Debt Ceiling: What Happens on August 2?

Last Updated Jul 25, 2011 9:58 AM EDT

The President is peeved--OK, maybe downright mad. Evidently, President Obama told congressional leaders, who are wrangling over a debt ceiling compromise, that "enough's enough."

I talked about the deficit (which is like your family's annual cash flow), the national debt (like your family's credit card balance) and the debt ceiling (the country's credit card limit) with CBS television stations this morning:

If we get to August 2nd without a deal, here's what's likely to occur:
  • US government bondholders will be paid
  • Social Security checks could be delayed
  • Non-essential government services will be shut-down
  • Non-essential government workers will be furloughed
  • US economy would grind to a halt, increasing the odds for a double-dip recession
And for those of you wondering wondering why the stock market is blissfully rising amid these potentially momentous events, here's the reason: Wall Street traders fully expect politicians to reach a deal. If there's no deal, look out below!
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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.