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Financial crisis: Default by the US government is no longer unthinkable
Posted by Chris Knudsen on September 21st, 2008
Here’s another good one from the UK Telegraph:
How much more can the US taxpayer take? It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the government itself could default. No?
Check out the chart showing the recent spikes in the US 10-year credit default swap. In other words, the market is now pricing-in the genuine possibility that the US will struggle to pay-back some of its long-term T-bills.
That possibility is still deemed to be quite low. But the ultimate financial question - until recently, unthinkable - is now being asked. Yes siree, the mighty US government could default. That’s how much the world has changed.
My thoughts are forthcoming…