When the sub-prime loan crisis triggered a global financial meltdown, two issues became very clear.
The first was that America had a serious structural corruption problem with co-mingled interests among the financial sector, regulators and politicians. The US had tilted its economy towards Wall Street and had undermined Main Street in the process.
The other issue was that America had become a nation whose growth flowed from over-consumption and the piling up of debt. China, on the reverse side and quickly becoming a consequential economic heavyweight, was underconsuming and piling up cash reserves.
'Global economic rebalancing' became the term of the times -- and Treasury Secretary Tim Geithner and others began talking in earnest about the importance to the global economy of China growing more through its own domestic consumption rather than through exports -- and of the US cutting debt and saving and investing more.
But addiction to consumption is hard to stop. One way to quickly adjust consumption patterns in the US and to force a different behavior is to default on America's sovereign debt.
There are huge and nasty consequences that lie ahead if the government does default. Former National Economic Advisor to President Clinton, Laura Tyson, has estimated that just a 50 basis point rise in basic interest rates will result in about 600,000 Americans losing their jobs. Some economists, on the far end of the scale, have said that default could trigger a 200 basis point rise in rates.