With debt impasse, how bad are overseas markets?

Bad, but not disastrous, at least for now. But the dollar is down, gold is up, and Dow futures indicate a sharply lower opening tomorrow morning in NY. No matter what happens on Monday, Wall Street analysts acknowledge the growing possibility of a default. If only investors knew what to do. From the WSJ:

Few of them have taken significant action. The main reason: No one knows exactly what to do. "If you don't know what you're going to do when the event happens, how do you make a trading decision?" said Alan De Rose, managing director of government trading and finance at Oppenheimer & Co. "That's a very difficult position."

[CUT]

"We're still figuring some of it out," says Mohamed El-Erian, chief executive and co-chief investment officer of Pacific Investment Management Co., manager of the world's largest bond fund. "And it's on the table as a risk." On Sunday evening, Mr. El-Erian said in an email that the "political ground is being prepared for a short-term stop-gap compromise" that probably will push stocks and the dollar lower and leave the U.S. debt rating "extremely exposed to a damaging downgrade."

That's becoming a common refrain: Short-term resolution followed by longer-term pain.