Betting against the US rising.

[MannyIsGod]

SAN FRANCISCO (MarketWatch) -- The cost of buying protection against the risk that the United States will default on its mounting debt has surged in the past months, outpacing the rise in corporate-credit costs, now that the government has absorbed more private-sector debt.



The spreads on credit-default swaps for U.S. government debt jumped to 97 basis points Tuesday, nearly seven times higher than a year ago and 60% higher than the end of last year, to a level roughly in line with those of France, according to data supplied by Markit. The spreads also hit a record last week.

http://www.marketwatch.com/news/story/Cost-buy-protection-against-US/story.aspx

Krugman thinks these people are stupid, though.


Has the risk of a US government default risen? Probably. Nonetheless, the people buying these contracts are crazy. A world in which the US government defaults would be a world in chaos; how likely is it that these contracts would be honored?http://krugman.blogs.nytimes.com/2009/03/10/credit-protection-madness/

I guess he's right. I'm not all that sure, though. In any event, if he is right then it shows why China keeps financing us. What other choice do they really have?

[smeagol]

CDSes are evil (I think somebody on this board told me that)

[RandomGuy]

http://www.marketwatch.com/news/story/Cost-buy-protection-against-US/story.aspx

Krugman thinks these people are stupid, though.

http://krugman.blogs.nytimes.com/2009/03/10/credit-protection-madness/

I guess he's right. I'm not all that sure, though. In any event, if he is right then it shows why China keeps financing us. What other choice do they really have?

I agree with that analysis.

Hell, I wish I could sell CDS's on the US government. Talk about a sure way to make money. In the event that you have to pay up the world is f***ed anyways.

Interestingly though, the US housing market, coupled with the strength of the dollar is leading to a lot of foreign interest in our housing market. I know of at least the Brits and the Chinese who are suddenly interested in snapping up US real estate.

Globalization may be villified for a lot of things, but the openness of the US to capital investments and legal protections of contracts in the US give us a singular advantage when it comes to attracting FDI.

[Extra Stout]

There is no purpose for those CDS's other than speculation. All they are, are glorified Vegas bets.

[DarkReign]

In any event, if he is right then it shows why China keeps financing us. What other choice do they really have?

Who else is going to supplant the US's position in China's export portfolio?

Theyre financing the US for one very important, selfish reason...there is no one (or group) of countries to replace the US consumer base for their widgets and whats-its.

[word]

Amazingly strong dollar during this. I'm looking for a weaker dollar the next few months but ..damn...dollar is beating the pound and the euro to death. Keeping PM prices artificially low, imho.

[Purple & Gold]

Amazingly strong dollar during this. I'm looking for a weaker dollar the next few months but ..damn...dollar is beating the pound and the euro to death. Keeping PM prices artificially low, imho.

The U.S. was the first one to get into this economic mess. They will be the first ones to get out of it.