They may be 2 different things but they seem to be integrated into the current "cliff" battle. Even your post seems to recognize the linkage with your bank analogy. They certainly impact each other.
So, are they just messing with us for drama while money (quietly) changes hands in secret or is this a genuine crisis?
They are integrated in that they both need to be decided at or around the same time, nothing more nothing less. We can pass a solution to one, none or both.
Now are they just messing with us?
No I don't think so, I honestly think both sides see this as a major issue and want to solve things their way.
Is this a major crisis?
It depends on what you mean by a major crisis. And know that there are many outcomes that could come out of this.
1. We go over the fiscal cliff but pass a debt ceiling increase: this will likely result in a recession of negative 1.5-3.0% GDP growth. (Is this a crisis well remember what Regan said, "a recession is when your neighbor loses his job, a depression is when you lose yours"... so it depends on if you lose your job or not because of this).
2. We don't go over the fiscal cliff but pass a debt ceiling increase: while this is likely the best short term fix and won't result in any recession and could even lead to economic growth, one must question if our markets will accept our ability to pay back our debt when we told them we would go over the cliff to justify more debt and removed that and then asked for more debt. This could lead us to a slow path of increased interest rates, meaning more debt (higher deficits as we would have bigger interest payments) and more issues.
3. We go over the fiscal cliff but don't pass a debt ceiling increase: this will likely see the worst results, as we will get spending cuts tax increases and default on our payments of our national debt.. Which will lead to higher interest rates very quickly and the only way to fix this problem will be to print money, which will cause inflation.
4. We don't go over the fiscal cliff and don't pass a debt ceiling increase: (very unlikely) however we will see a default of our payments, interest rates will quickly rise, and only way to fix this problem will to print money which will cause inflation.
So I think it depends on what happens, there are 4 likely scenarios... If you think any of them are "major crisis's" are up to you to decide, however no matter what way you look at it, we are in a difficult situation. But the way I see things are, no matter what solution we pick, even if it is the most likely #2 it is kind of like a college student who hands in his papers late and asks the professor to accept them. It may work a few times, but at some time, they will not get credit for their work, and will fail... The credit for their work is what the markets see us doing to keep a sustainable national debt. Once markets no longer accept our work, our promises our solutions, we will see interest rates skyrocket which will cause interest payments to go up by likely around 500 billion a year, meaning deficits 500 billion a year more...
