I explained this here, here and I even brought in Dick Morris explain it, here.
Today, we learned that even the Obama administration agrees there is no default possibility. As my twitter nemesis, Moronwatch, might say, Obama is beholden to his supporters on Wall Street and at the too big to fail investment banks (like Goldman-Sachs) - so, he won't let a default occur.
Know how we know this (besides it would be criminal of Obama to allow it to happen when he could avoid it)? Because this is what the Obama administration is telling their crony-capitalists at these banks.
"In a series of phone calls, administration officials have told bankers that the administration will not allow a default to happen even if the debt cap isn't raised by the August 2 deadline."
This doesn't mean it's a good idea to stop paying things like the EPA, but, as I've said before, social security gets paid, Medicare/Medicaid gets paid, debt service is completed, and there's some left over for Michelle Obama to go to Spain or Tahiti, or wherever she needs to go.
Win/Win for all us, n'est ce pas?