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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (74518)	5/25/2011 11:48:09 AM
From: marcher	Respond to of 217753

yep

To: TobagoJack who wrote (74518)	5/25/2011 3:46:49 PM
From: elmatador	Read Replies (3) \| Respond to of 217753

US default ‘more likely than in Indonesia’ By James Mackintosh Published: May 25 2011 18:27 \| Last updated: May 25 2011 18:27 It sounds dotty to suggest the US is at imminent risk of default. A country which has rarely been able to borrow so cheaply, which issues debt in its own currency and has just demonstrated that it can print as much money as it likes need never miss a coupon payment. Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - ft.com Yet in the past fortnight traders have come to the conclusion that America might breach its own constitutional clause that its debt “shall not be questioned”. According to Markit, the cost of one-year US credit default swaps, which insure against default, almost tripled in six trading days. Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - ft.com Yet in the past fortnight traders have come to the conclusion that America might breach its own constitutional clause that its debt “shall not be questioned”. According to Markit, the cost of one-year US credit default swaps, which insure against default, almost tripled in six trading days. Video: US default no longer unthinkable - May-25 According to this – far from perfect – measure, the US is now more likely to default than Indonesia or Slovenia in the next 12 months. America’s dysfunctional politics is starting to infect the markets. To blame are congressmen who, like House Speaker John Boehner, argue it would be less damaging to default than to raise the debt limit without dealing with the deficit. Traders had assumed this was political brinkmanship as usual until Mr Boehner was publicly supported by Stanley Druckenmiller, an eminent former hedge fund manager. He told the Wall Street Journal earlier this month that a few days of missed payments would be worth it to force the White House to accept cuts ccording to this – far from perfect – measure, the US is now more likely to default than Indonesia or Slovenia in the next 12 months. America’s dysfunctional politics is starting to infect the markets. To blame are congressmen who, like House Speaker John Boehner, argue it would be less damaging to default than to raise the debt limit without dealing with the deficit. Traders had assumed this was political brinkmanship as usual until Mr Boehner was publicly supported by Stanley Druckenmiller, an eminent former hedge fund manager. He told the Wall Street Journal earlier this month that a few days of missed payments would be worth it to force the White House to accept cuts Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - ft.com The danger is that a technical default does nothing to bring Democrats round, and there is no sign that Republicans are willing to accept tax rises, also needed if the budget is to balance. Rather than a short sharp political manoeuvre, default could drag on – and become a total disaster. If a technical default led to a rating downgrade – as it should – it would be catastrophic, forcing rule-driven investors to dump Treasuries and sending yields through the roof. For now, default worries still seem to be confined to the CDS market. The more congressmen try to make a political virtue out of default, the bigger the danger that fear spills over into the broader bond markets. Copyright The Financial Times Limited 2011. ft.com