While I was in New York yesterday, I stopped by a leading investment firm to talk about this and other aspects of the debt-ceiling drama. I’ll share with you what I learned later today. During the hour-long meeting, I noted that it was reported that the price of a gold hit a record $1,600 an ounce. That’s when it was pointed out to me that the stock market was down -- first 100 points, then 160 points -- since our meeting began.

Well, the news isn’t getting any better.

Debt worries roil markets” is the headline topping the Wall Street Journal’s front page, proving the markets’ yawn is giving way to hyperventilation (which is a step below panic). Factoring in this is the financial mess in Europe. But so, too, is the growing uncertainty in the once-largely-risk-free United States, which has driven the stock market to its lowest level since late June and contributed to the underperformance of 30-year Treasury bonds.

Meanwhile, gold broke another record yesterday, closing at $1602.40, up $12.30 since Friday. As USA Today explains: “Gold fares well when people lose confidence in paper money, and faith in the euro and the U.S. dollar has taken a pounding lately.”

And in an exclusive interview with Fox Business Network yesterday, Nikola Swann, the sovereign ratings director at Standard & Poor’s, warned that a downgrade of the U.S. credit rating could come before we reach the Aug. 2 default deadline.

“It’s at least a 50% probability of a downgrade,” Swann said. He added, “We would expect to move the rating down before any default. If we are convinced there will be a default, we will cut the rating earlier. The rating is a predictor of default.”

And then Swann said something that has ominous implications for the plan being worked out by Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).

“We need to see bipartisan agreement on fiscal consolidation plan that would be multi-year and large enough to stabilize the net government debt to GDP ratio. We believe that would have to be in the order of $4 trillion. A plan that is agreed to by both parties; making the proposition that it could survive a change of administration credible.”

The McConnell-Reid plan doesn’t meet that threshold. So, what we’re seeing is Washington moving fast to make a train wreck of its own creation less bad. My next post will get into why.