"The world's largest economy looks like the Land of Oz run by munchkins," Willem Buiter, Citigroup's global chief economist, told CNBC after the U.S. government shutdown began.

"It's an irresponsible act and fortunately it need not be too serious if they wake up and declare victory on both sides and get on with the job of running the country," he said.

Buiter believes government leaders are currently doing little more than creating an embarrassment and they can avoid any doing any significant damage. But he warns that this "political disfunctionality" also has the potential to become an "economic disaster" if it raises the risk of a sovereign debt default.

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It is "potentially an economic and financial catastrophe if the U.S. decides not to raise the debt ceiling and if the U.S. were to default on even a small portion of its debt," he said.

"It would pull the rug from under the global economy," Buiter warned.

He feels "absolutely" certain that those global effects could unfold in matter of weeks if Washington doesn't get its act together.

A default on U.S. federal debt is not comparable to such an event occurring in an emerging nation like Argentina, Buiter stressed.

" U.S. sovereign debt is the lynch pin of the global financial system. It's used as collateral for everything," he said.

U.S. Treasury Secretary Jack Lew has also warned Congress of the seriousness of a potential default.

Last week, he notified congressional leaders that the nation likely wouldn't have the capacity to borrow after Oct. 17." At that time, the federal government is expected to have about $30 billion in cash.

The government has been uncomfortably close to the debt ceiling since May, Reuters points out. Emergency measures, such as suspending investments in federal pension funds, have allowed the nation to continue to continue paying the bills. But Lew has warned that ability to use those maneuvers would end in mid-October.

In Lew's letter to Congress, he warns, "if the government should ultimately become unable to pay all of its bills, the results could be catastrophic."

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