The default debate has gone global: In both the US and Europe, markets are confronting questions about the sanctity of government debt. If handled wrong, this risks triggering a fresh financial crisis.

European politicians and central bankers are at loggerheads over whether Greece's private creditors can accept changes to their terms without triggering a default. In the US, there is talk of a "technical" default on Treasurys if agreement cannot reached in Washington on raising the debt ceiling.