From Forget About Black Swans, the One Ahead is Neon on the Wall Street Journal:

As Nassim Nicholas Taleb’s bestseller “The Black Swan” made clear, the human mind is poorly equipped to prepare us for rare, important and unpredictable events. But maybe our minds—and our markets—aren’t very well equipped to protect us against neon swans, either.

Many investors seem to be coping with what seems like an obvious risk simply by closing their eyes.

…If the U.S. defaults or its credit rating is downgraded, says William Bernstein of Efficient Frontier Advisors in Eastford, Conn., Treasury prices would probably “go to 97 or 98,” losing only a few percentage points in value. “You’re not going to wake up one morning over the next couple of weeks and find they’re priced at 50 cents on the dollar,” says Mr. Bernstein.

“It is absolutely inconceivable that we would flat-out default and not pay anything,” he adds. “The worst-case scenario is a very temporary payment problem, and I think the Treasury market knows that.”

But the ripple effects could be considerable. Mr. Bernstein expects corporate and municipal bonds to drop much more drastically if the Treasury market is hit by default or downgrade. And stocks, he says, could be massacred. For investors with cash and courage, a crisis in U.S. Treasurys might well pose a historic buying opportunity. If, instead, it turns out to be “like a giant asteroid hitting the earth, Mr. Bernstein says, “then there isn’t much of anything that’s likely to protect you.”

This article may be outdated since they raised the debt ceiling recently, but it’s still a good read.