I found an interesting article today in the Calgary Herald talking about the debt crisis currently facing the US and its possible impact on those of us north of the border. The full article can be found here, or just read on. Our Full Review could be the first step to solving your own personal debt crisis.

Canada could come out of the rancorous U.S. debt-ceiling debate unscathed, but might face far more serious consequences if legislators fail to firmly resolve the issue, TD Economics said in a report Thursday.

"The impact on Canada could range from a hiccup in our base-case economic outlook, to one in which we are thrown back into a recession that could have a global reach," chief economist Craig Alexander said.

TD lays out four possible scenarios:

• In a best-case scenario, the U.S. raises the debt ceiling and sets about on a credible deficit reduction plan. In this case, the Canadian economic outlook will be unaltered;
• If there is failure to pass a credible deficit reduction and the U.S. is downgraded, the Canadian dollar is likely to remain lofty, but likely not enough to further threaten Canadian growth;
• Should Congress fail to raise the debt ceiling by the deadline, the U.S. economy could contract if it extends beyond a short period and Canada would see its growth pull down, too;
• In the extreme case that the U.S. government misses a debt payment, the Canadian economy could be pushed back into recession.

In a separate report, CIBC World Markets chief economist Avery Shenfeld cautioned that Canada should hope for a package that doesn't bring tax hikes or spending cuts in the near term, which could slow economic growth in both Canada and the U.S.

"For the U.S. economy, investors should actually prefer an extension of the debt ceiling without the grand bargain on restraint," said Shenfeld. "America's biggest challenge isn't its deficit, but getting growth reignited to the pace at which the economy can tolerate a smaller role for government."

U.S. lawmakers were headed to the Republican-controlled House of Representatives on Thursday to vote on a Republican bill to raise the $14.3-trillion US government debt ceiling - but the vote was delayed late in the day.

Uncertainty over the outcome of the protracted debt debate has roiled stock markets worldwide and driven the U.S. dollar sharply lower.

Failure to raise the debt ceiling by the Aug. 2 deadline would leave the U.S. unable to meet its obligations and lead to a default that would rattle the global financial system and tip the U.S. back into recession, analysts have warned.

Many fear that even if the spending issue is resolved, the U.S. could still face a downgrade of its vaunted triple-A credit status if legislators fail to come up with a plan that addresses the country's mounting debt obligations.

In that event, which falls into TD's second scenario, investors may maintain a preference for safe-haven currencies, like the Canadian dollar, which has been bid up as high as $1.0601 US in recent days as investors fled the U.S. greenback.

"The higher valued Canadian dollar would present a modest challenge for Canadian economic growth, but likely not enough to materially impact the overall outlook," Alexander said.

The basic outlook, contained in TD's best-case scenario, is for U.S. growth to "trudge along" at 2.5 to three per cent and for the Canadian economy to continue its transition from domestic sources of growth toward exports and business investment. The dollar would remain strong, but the recent run-up would be unwound as uncertainty about the U.S. situation eases.

Under the third scenario, in which the deadline is breached, the U.S. would have to cut spending leading, pulling down growth as Canadian exports to our largest trading partner falter. It could also raise costs for Canadian companies borrowing in the U.S. market as U.S. bond yields would rise, and could hurt Canadian equities, which would fall if U.S. equities swoon.

Under the worst-case scenario, in which the U.S. misses a debt payment, "a freeze-up in credit markets that could accompany a U.S. default would be enough to put significant strain on credit in the Canadian economy as well. Exports would slump once again and this time the domestic economy would likely be less resilient given the highly leveraged state of Canadian households.

In other words, Canada could be thrown back into an economic recession."