Credit Default Swaps on US
September 17th, 2008 8:47 am | by John Jansen |Bloomberg is carrying a story that CDS on US Government debt is rising. If there are more transactions over time similiar to the one completed yesterday, the CDS will continue to be under pressure and I suppose ultimately the AAA rating would come under attack.
5 Responses to “Credit Default Swaps on US”
By Stuart on Sep 17, 2008 | Reply
So, what happens to the dollar if we lose AAA status.
By John Jansen on Sep 17, 2008 | Reply
It goes to hell in a handbasket
By anon on Sep 17, 2008 | Reply
Not necessarily. Japan has a lower credit rating that Botswana (and a much higher debt/gdp ratio than the U.S.), and everybody loves the yen (and many see it as a safe haven).
On the other hand, gold somehow managed to climb forty dollars an ounce today without too much notice.
By anon on Sep 17, 2008 | Reply
Make that fifty dollars an ounce (almost instantly).
By John on Sep 17, 2008 | Reply
S&P and Moody’s have already warned that the AAA credit rating may drop by as soon as 2012 due to US government’s long-term fiscal position. Recent events will only accelerate things.