Dire high-level warnings about the consequences of a continued stand-off between hardline Republicans and the Democrats in Washington are grounded in reality, but they are also part of an attempt to settle the brawl before the financial market apocalypse that is being foreshadowed is actually imminent.
They are not so much shadow-boxing as an attempt to settle a world championship fight in the preliminary bout instead of the championship bout itself.
The US government began a partial shutdown on Monday afternoon Australian time after lower house Republicans refused to pull riders they had attached to this year's budget supply bill that would have delayed and undermined the Obama administration's overhaul of America's health insurance system. The partial shutdown works like a steadily tightening vice on the US economy. As it continues, America's economic recovery weakens.
The really big risk, however, is that the blocking tactics the Republicans are using to try to roll back President Barack Obama's health reform package will be used again when Congress votes on raising the government's $US16.7 trillion ($17.7 trillion) debt limit. They are sending mixed messages, and the ceiling is expected to be reached on October 17.
If it has not been raised by then, a brief countdown to what is being described as a "technical default" by the US government on debt that is already issued will begin.
Around the middle of next month, the government will fail to financially cover interest payments on a tranche of debt. Distinctions between a so-called "technical" default and a real default will at that point become meaningless as news that the world's most important debt issuer has failed to cover its obligations sends shockwaves around the world.
There will probably be massive forced selling as the default triggers bond fund mandates that specify that only top rated, untainted securities can be owned. There will certainly be panic selling on the shock of a default by a government considered safest of all in times of crisis.
The Treasury Department trumpeted the risks in a paper it issued on Thursday. America had never defaulted on obligations it said, and the US dollar and US government debt sat at the heart of the global financial system. "A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze," it warned. "The value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008."
The International Monetary Fund is holding its annual meeting in Washington next week, and IMF managing director Christine Lagarde issued a similar warning, saying raising the debt ceiling was "mission critical ... the government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the US economy, but the entire global economy".
America has once again climbed away from a financial and economic crisis more quickly than many expected. Its annual budget deficit as a percentage of gross domestic product has already halved from its global crisis high to less than 5 per cent.
As it bumps up against the existing $16.7 trillion debt ceiling, Washington's total debt load is still uncomfortably high, about 75 per cent of GDP compared with 36 per cent in 2007 before the global crisis erupted.
Like the Democrats, Lagarde argues, however, that heavy budget cuts and choking government borrowing at this time would be counterproductive. The US needed "less fiscal adjustment today and more tomorrow," she said on Thursday.
One of the uncertainties in the situation is that logic is not necessarily central to the tactic being deployed by the Republicans to use the budget bill as a way to attack Obamacare - a health industry restructure that has already been passed by both houses of Congress, unsuccessfully challenged in the nation's highest court and implicitly endorsed by voters in the election that secured Obama a second term in November last year. Some members of the faction have also been quoted as saying they do not believe a debt default would be catastrophic.
As the government shutdown began on Monday, polls were already showing that more people blamed the Republicans for the mess than the Democrats, and the pressure is mounting as authorities warn that a market meltdown is possible.
It is difficult to see a resolution of the crisis if hardline Republicans do not come to believe their tactics are extracting too heavy a toll, not only on the US economy but also on their own party's standing.
So far the markets are betraying concern rather than outright fear. Wall Street's Dow Jones Industrial Average of 30 blue-chip stocks and the broader Standard & Poor's 500-stock index both fell 0.9 per cent on Thursday as Treasury and the IMF issued their warnings.
They were down 2.2 per cent and 1.2 per cent respectively over five days, but were still up 14.4 per cent and 17.7 per cent respectively in the year to date. Europe's benchmark Euro Stoxx index was down 0.7 per cent over five days but still up 10 per cent for the year, and Australia's S&P/ASX 200 index was down 2 per cent over five days but up almost 12 per cent this year.
The relatively modest moves this week reflect a belief that a deal will be done, allowing accumulating evidence of a global economic recovery to reassert itself.
The deal must end the budget roadblock and clear the way for an increase in the government's borrowing limit to be effective, however - and it is must be forged by the Republicans and Democrats by the end of next week at the latest to avoid the onset of panic in global markets.