Investors Are Anticipating An America That Is Unable To Pay Its Bills

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Investors Are Anticipating An America That Is Unable To Pay Its Bills

By Michael Panzner on September 17, 2008 | More Posts By Michael Panzner | Author's Website

In a July post, I noted that the price of a credit default swap (or CDS, a form of “insurance” on creditworthiness) on 10-year U.S. government debt had climbed to a record 21.8 basis points (one-hundreths of a percentage point).

The rise indicated that investors were becoming increasingly worried about the financial health of the United States.

After treading water in the seven weeks that followed, the cost of insuring against a U.S. debt default has again moved higher, touching a fresh record of 24 basis points on Monday before easing back a tad to 23.3 bp today.

Amid bailout after bailout, is it any wonder that investors are beginning to anticipate what was once unthinkable — an America that is unable to pay its bills?

You can read the July post here.

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