It's actually going to happen...
I'd say the chances of them getting it done in four days, during a weekend no less, is impossible.
So inflation is definitely is going to go up, our cost of borrowing is about to skyrocket which means tax hikes at the federal level.
On the 3rd, the markets will probably not react too much but the hedge funds are going to. You are about to see a massive run on the banks again, along the lines of Lehman Brothers collapsing because people won't trust our debt but they do trust our dollar.
I hope corporate has been stacking the sand bags in this case. Things are about to get messy. After the Hedge funds, they are then going to bonds, and finally stocks.
/As for the politics... The country was angry at Wall Street which gave President Obama a shot at fixing it. He didn't possess the personality to forcibly present his case. Wall Street was let off the hook and that Anger was left to free float and to it's credit, the Tea Party took advantage of it. They didn't know what they were doing afterward but still...