His views largely reflected those shared by a number of money managers interviewed over the last week in London, Europe's financial nerve center. As the city contemplates the abyss that it hopes will never come, heads shake at what they see as the Americans' inability to operate a government. The prevailing belief seems to be that crisis will be averted and that the politicians will come to their senses at the 11th hour. The alternative is simply too dire to contemplate.
"Like most people on this side of the pond, we watch with incredulity, really, at the positions they have painted themselves into and the unnecessary stress and damage," said Tim Haywood, the head of the fixed-income unit at the London office of GAM, an asset management firm based in Zurich. He said his firm had considered pursuing a complex hedging strategy, but came to view it as unworkable.
"Most of us put down the chance of an unresolved default of U.S. Treasurys at below 1 percent," he said. "However, even with such a low percentage, the ramifications of unresolved default would be so serious that clearly we have to check everything to ensure that we survive and our customers' capital is preserved."
(Read more: Relax! Government won't run out of money Thursday)
He said his firm was not heavily invested in the American dollar and had a cash allocation that was more focused in Europe. But they were holding "a small number of Treasury calls," or options contracts that give them the right to buy United States Treasury bonds, which, he conceded, "sounds completely counterintuitive."
"It may be that the risk-free asset does re-emerge as being U.S. Treasurys after a calamity," he said.
For Johannes Müller, the chief economist at Deutsche Asset & Wealth Management, a unit of Deutsche Bank, "The possibility of a default is seen as very, very low, so we thought about a risk case, and formulated a risk scenario, but the probability is a symbolic one." He added, "I don't think by and large the market is anticipating a technical default."