07/26/2011 06:41 pm ET Updated Sep 25, 2011

Why The U.S. Won't Default On August 2

The only thing that matters for global markets over the coming days is whether a deal can be struck in Washington over the debt ceiling. That said, there is one major misconception – fostered by politicians – about what the stakes actually are. On August 2, the U.S. government will reach the limit of its statutory borrowing authority as determined by the Treasury Department. It will not, however, default on its debts even if a deal isn’t reached.

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