A U.S. default, or near-default, could also cause financial panic around the globe as international investors flee Treasury bonds and bills and other dollar-denominated investments. The value of the U.S. dollar against other major currencies could tank.

Given the nation's already high unemployment rate and shaky housing markets, it would likely send the economy quickly back into recession.

Dow Jones Industrial Average lost 778 points on one day in Oct 2008 when the House voted down the bank bailout bill, known as the Troubled Asset Relief Program — a vote that was quickly reversed.

Economists can easily see a 1,000-point or larger plunge in the Dow if the negotiations to raise the debt ceiling fail — dealing a savage blow to already fragile 401(k) plans and similar retirement investments.

How hard and fast really is the Aug. 2 date?