Washington's wrangling over the debt ceiling may soon have some very real economic consequences. Banks are not amused, and they are preparing to reduce their Treasury buying in August if an agreement is not reached. This is a key point, because it shows that even if the U.S. does not default, "technical default" -- when the U.S. continues to pay interest on debt, but begins putting off other obligations due to too few tax revenues to cover everything it owes -- won't be a very pleasant situation for anyone involved.
