While the path forward remains highly uncertain, the unprecedented destination of default remains a possibility and would almost certainly have disastrous consequences for markets and the economy. That said, even a last-second agreement that allows the Treasury to continue meeting its obligations—by either increasing the debt ceiling or suspending it for a few months—could have long-lasting destabilizing impacts. Further, it appears unlikely that a resolution to the debt-ceiling drama will include any meaningful and necessary fiscal reform.

As investors, we’re left to observe the political kabuki surrounding the debt-ceiling debate from the cheap seats, hoping to glean some semblance of meaning amid the finger-pointing and grandstanding and posturing. That we have grown accustomed to the political brinksmanship that seems to precede every eleventh-hour agreement averting the worst-case scenario, we must be prepared for all potential alternatives. Below, we answer a few questions in an effort to provide some insight into the current circumstances.