Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios Pro Rata

Dive into the world of dealmakers across VC, PE and M&A with Axios Pro Rata. Delivered daily to your inbox by Dan Primack and Kia Kokalitcheva.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Nashville news?

Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Columbus news?

Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Dallas news?

Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Austin news?

Get a daily digest of the most important stories affecting your hometown with the Axios Austin newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Atlanta news?

Get a daily digest of the most important stories affecting your hometown with the Axios Atlanta newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Philadelphia news?

Get a daily digest of the most important stories affecting your hometown with the Axios Philadelphia newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Chicago news?

Get a daily digest of the most important stories affecting your hometown with the Axios Chicago newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top DC news?

Get a daily digest of the most important stories affecting your hometown with the Axios DC newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Shoshana Gordon/Axios

No one wants to test the strength of the debt ceiling. The current Treasury Secretary, backed up by many of her predecessors, says that it's so rock-solid that running into it will be catastrophic.

Why it matters: The brinkmanship we're currently seeing over the debt ceiling is the kind of dance that no sane person would perform on the edge of a real cliff. One possible explanation is that the cliff isn't quite as vertiginous as politicians are being warned it is.

What they're saying: The official stance on hitting the debt ceiling, from Treasury Secretary Janet Yellen, is positively apocalyptic:

Doing so would likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency. Default could trigger a spike in interest rates, a steep drop in stock prices and other financial turmoil. Our current economic recovery would reverse into recession, with billions of dollars of growth and millions of jobs lost.

Between the lines: The U.S. hasn't defaulted on its debt since Richard Nixon took the dollar off the gold standard in 1971.

  • No one can be certain about the consequences of a default — and in fact there's no indication that the markets are concerned about such an event, with stocks near record highs and interest rates near record lows.

Where it stands: The two-year debt ceiling suspension enacted in 2019 ended on August 1, 2021. Since then, Treasury has been spending down its reserves. Absent another hike or suspension of the debt ceiling, then at some unknown point in the next few weeks it will be forced to default on all or some of its obligations.

Be smart: Most debt defaults are damaging because they cause financial harm to creditors. It's far from clear that a U.S. sovereign default would have that effect.

  • In times of uncertainty, investors often turn to safe assets, and specifically to Treasury bonds. Moreover, when there's any problem with liquidity in the Treasury market, as there was in March 2020, the Fed has proved that it's willing and able to use its unlimited firepower to step in and buy as many Treasury bonds as the market wants to sell.
  • A U.S. default, in contrast to most other defaults, would cause no losses: The recovery value would be 100 cents on the dollar. In that sense it would be akin to the technical defaults by Fannie Mae and Freddie Mac when the two agencies were placed into conservatorship in 2008. No creditors suffered losses when that happened.

Reality check: Hitting the debt ceiling would almost certainly cause harm to individuals who rely on timely checks from the government, from members of the armed services to people living on Social Security to anybody receiving the monthly child tax credit.

The bottom line: Congress often waits to see market panic before acting. In a weird way, the worst outcome for the United States might be that the country defaults and the market barely wobbles. That could push the brinkmanship — and individual hardship — to even more ludicrous extremes.

Go deeper

Evergrande isn't alone

Illustration: Aïda Amer/Axios

China Evergrande’s debt problems aren’t an anomaly. Signs of stress are piling up in China’s real estate development sector, and more companies are signaling they may not be able to pay back their debt.

Driving the news: Fellow builder Modern Land asked its bondholders if it could delay a bond payment by three months, and Sinic said it will likely default next week, Reuters reports.

4 hours ago - Technology

Facebook changes corporate name to Meta

Screen shot of CEO Mark Zuckerberg at the company's "Connect" virtual event

CEO Mark Zuckerberg on Thursday said the social media giant is renaming its company Meta.

Why it matters: The effort is meant to shift its image from a social media platform to a “metaverse” company that focuses on building virtual work and social communities.

Dan Primack, author of Pro Rata
4 hours ago - Economy & Business

Filings show Sweetgreen isn't profitable, despite claims

Illustration: Sarah Grillo/Axios

Restaurant chain Sweetgreen on Monday filed to go public, and revealed that it lost money in each year since 2014.

Why it matters: The company lied when it repeatedly told reporters it was profitable.