It occurred to me that maybe most people don't actually realize just how serious the fiscal situation in the U.S. is. They have some idea that August 2 is not really a hard deadline, that there are some games that can be played with the books and delaying social security payments and whatnot. If you think this, if you are not seriously worried, you need to listen up because you do not understand the situation.
It is not the case that on August 2 the U.S. hits its debt limit ceiling. The U.S. hit its debt limit ceiling back in May. Since then we've been running on cash reserves. What happens on August 2 is that the United States of America runs out of cash. In the absence of at least some additional short-term borrowing, a default is inevitable. Yes, in the aggregate, there is more than enough money coming in to service the debt, but the timing is wrong. Tax revenues are not a steady stream, they come in sporadically, and the next big batch of revenue is not expected until after the next round of debt payments are due. The U.S. is quite literally living paycheck-to-paycheck, and on August 2 we hit the wall hard.
I hope I do not have to point out the obvious, that if we do hit the wall hard, the result will be that even the sporadic tax revenues will shrink because we will be immediately embroiled in Great Depression II, which will make the first one look like a cake walk by comparison. The actual bankruptcy of the United States of America, that is, a situation where total tax revenues are not enough to cover the debt even in the aggregate, is not out of the question.
On August 3, if Congress does not get its act together, there are going to be a whole lot of folks who will wake up and find themselves with no job, no cash, and very shortly thereafter, no home and no prospects, and they will say, "What the fuck just happened?" Now you know. Tell your friends. Call your senators and congresscritters, ESPECIALLY if they are tea partiers. This is serious, serious shit, folks, and time is running out.
[See my follow-up here.]