We were not in any danger of defaulting. The media sensationalized everything. Foolish Republicans heeded the even more foolish Tea Party over the lousy Obamacare. My 401k did really well during the "crisis".
The real default deadline was in early November. There is no way, no how that the country was going to default.
You're right in saying the deadline wasn't in October. The truth is they wouldn't have known when the deadline was until they reached it, because it's a prediction/estimation. You're also right that the monetary cost of the shutdown is debatable, because it is. However the whole drama is most certainly not a case of the media making a mountain out of a mole hill.
Whether the risk was real or not doesn't matter. What matters is how the general market, that is consumer, perceives the risk. All the talk about debt ceilings and defaulting would have had, without out a doubt, a destabilised effect on confidence. Why? Because the man on the street
perceived the risk to be real.
That's what made the drama a big deal because confidence is one of the most important and hardest to manage facets of economic policy. You lose control over confidence and you're opening yourself to a host of problems.
Just look at Australia. Our economy by most measurements is doing great. Yet ask anyone in retail and they'll tell you a different story. Because whilst our economy as a whole is doing comparatively well that isn't the story the man on the street has been hearing or feeling and as such their confidence has decreased which in turn has decreased their spending and as a result we have a retail sector that's struggling.
