The Beginning of the End for America's AAA Rating?

Over the past three days, the price of a credit default swap (or CDS, a form of "insurance" on creditworthiness) on 10-year U.S. government debt has risen by 8.3 basis points (one-hundreths of a percentage point), or 61 percent, to 21.8 basis points, and is now almost 80% higher than the median value of this CDS since it was first quoted on April 2.

There is no doubt that talk of a bailout of Fannie Mae and Freddie Mac has spurred what could be a short-lived spike. Still, it makes you wonder if the market is starting to price in what many say is inevitable after years of profligacy and failed policies: a credit downgrade for the United States.

(Hat tip Accrued Interest)

Comments

[sysin3]

I have most of my money in treasuries, on the theory that if those fail -- losing money is the least of our problems.

But most days, I don't even trust those.