U.S. Is Riskier Than Euro Zone; So Says CDS Market !

• The economic conditions in America is far dire than the Eurozone. Although, all the MSM is hyping on, is the sovereign debt default in the Eurozone, the US will face a far worse day of reckoning. As the USD is the world reserve currency, the entire world will be badly affected. A global monetary crisis is brewing. The question is: when the plug will be pulled by the PTB. The plan it seems is a repeat of 1929-1939 and the endgame is a world war! The Wall Street Journal reports:
    
  NEW YORK — Something troubling has occurred in the market for default protection on the debt of the world’s biggest borrower. As the folks at Standard Poor’s Valuation and Risk Strategies division noted in a research note Monday, the difference between the spread on U.S. sovereign credit default swaps and an equivalent benchmark for AAA-rated euro-zone sovereigns flipped into positive territory March 12. As U.S. CDS spreads expanded to their widest levels in two years, that cross-region gap blew out to 5.7 basis points last Friday before narrowing to 4.7 Tuesday.
   
  Wider CDS spreads indicate that sellers of insurance against a particular issuer’s default are charging more for it. In effect, the positive U.S.-versus-euro zone spread means investors think the risk of a U.S. default–however remote–is greater than that on euro-denominated sovereign debt.
   
  So much for the view that low inflation and loose monetary policy make for a rosier debt outlook for Treasurys than for the debt of crisis-hit euro-zone sovereigns. “We’ve seen CDS on U.S. Treasurys break with euro CDS before, but never to the degree we have here,” said Michael Thompson, head of research for S&P’s
   
  Valuation and Risk Strategies group. “If we sit on this precipice for a time, I think a lot of market participants would see this as a bit of a shot across the bow, a bit of a wakeup” for anyone who’s complacent about U.S. debt.
   
  Wouldn’t it also challenge U.S. Treasurys’ status as the so-called “risk free” benchmark? S&P didn’t go there. But the report did say the trend “reflects increasing market anxiety surrounding the U.S.’s credit quality.” In other words, a fiscal deficit worth 10% of gross domestic product–in the absence of a clear plan to reduce it — matters.
    ….
  Thompson’s team also noted that the deterioration in U.S. default swaps meant that S&P’s “market-derived signal” dropped to ‘aa+,’ its lowest level in two years. The historical series for that indicator is based on an established correlation with actual S&P ratings.
   
  There’s no indication that S&P’s separate ratings division is about to downgrade the U.S. ‘s vital ‘AAA’ rating. But over time, ratings analysts cannot stay blind to market signals like this one. As its weighs the stimulus needs of a still-fragile U.S. economy against future risks to debt servicing costs, the U.S. government can’t ignore market signals either.
   
• See also:
   
  Gerald Celente: Great 2010 Crash is Looming !
  Bob Chapman: The Illuminist World Economic Collapse Bomb!
  MEP: Euro Will Collapse, ‘Pig States’ To Bring EU Down !
  ECB’s Nowotny Says Governments May Face Threat of ‘Debt Spiral’!
  Moody’s Fears Social Unrest As AAA States Implement Austerity Plans!
  Jim Rogers: Social Unrest, Debt Default & Government Corruption!
  Marc Faber And Mish Shedlock: We’re Doomed and Washington Can’t Do Anything About It !
  Collapse of the American Empire: Swift, Silent, Certain!
  Bob Chapman: World Constitution, World Government and World Currency Run by Banksters! The Rise of The ‘Mystery Babylon Whore’ of Revelation 17!
  Bob Chapman: Sovereign Debt Default, Dollar Devaluation, Economic Depression and War!
  Europe’s Banks Brace For UK Debt Crisis!
  Max Kaiser Details The Banking Cartels Financial Criminality in Pillaging Europe!
  Riots in Athens as Thousands Protest Against Cutbacks!
  Bill Fleckenstein: Greece And UK Are Suffering A Dire Funding Problem That Is Headed For US Shores!
  Fitch Warns Britain and Questions Greek Rescue as Sovereign Risks Grow! 
  Bob Chapman: The Albatross of Sovereign Debt!
  Marc Faber: Forget US Stocks, Buy Gold Every Month ‘Forever’!
  Bob Chapman: The World is Heading Towards Many Years of Economic Darkness!
  Bill Gross: Markets Will Soon Discover How Sovereign Nations Can Go Bust Just Like Companies!
  Greece Now, U.K. Next as Scots Ready for Pound Plunge !
  Ron Paul: The US Government’s Debt Can Never Be Repaid!
  Bob Chapman: Illuminati Banksters’ Final Moves To Bankrupt The World And Push For World Government!
  Dennis Gartman: The Euro Is ‘Doomed’ !
  Concerns Grow Over China’s Sale of US Bonds!
  Doomsday Is Here For The State Of Illinois!
  Ron Paul: Chaos in The Streets and Poverty Coming To the USA!
  Charlie Munger: Basically, It’s Over! A Parable About How One Nation Came To Financial Ruin!
  On the Brink of a Bond Market Apocalypse!
  Ron Paul: We Are On The Brink Of A Financial Cataclysmic Event ! We Will Have A Currency Crisis!
  GEAB N°42 : Towards a Global Systemic Crisis of the World Economy!
  Britain At Risk Of Worse Deficit Crisis Than Greece!
  Charles Ortel: Risks of U.S. Default Are Very Real !
  Bill Gross: Avoid UK Debts … It is “Resting On A Bed Of Nitroglycerine”!
  Europe’s Exposure To ‘PIGS’ Problem!
  Niall Ferguson: A Greek Crisis Is Coming To America!
  Think the PIGS Are in Trouble? These 7 U.S. States Could Be Heading for Something Worse!
  Spanish Intelligence Probing Debt “Attacks”!
  Fears Rise of Euro Government Default !
  Greece ‘Dress Rehearsal’ For U.S.!
  20 Reasons Global Debt Time Bomb Explodes Soon!
  John Mauldin: Greeks Bearing Gifts!
  Niall Ferguson: Others Will Follow Greek Debt Tragedy!
  Funds Flee Greece as Germany Warns of “Fatal” Eurozone Crisis!
  S&P Threatens Japan Downgrade!
  Bill Gross: Avoid UK Debts … It is “Resting On A Bed Of Nitroglycerine”!
  The Global Debt Bomb!
  Godfrey Bloom: End of National Sovereignty & The Beginning of Global Servitude !
  Greece Debt Default Could Take Eurozone Down With It !
  More and More American States on Budget Brink!
  Is The Euro Headed For A Breakup? ECB Prepares Legal Ground For Euro Rupture As Greek Crisis Escalates!
  GEAB N°41: The Decade 2010 – 2020, Towards A Knockout Victory By Gold Over The Dollar!
  GEAB N°40: Growing Sovereign Debt Default Risk Will Drive Central Banks Toward Gold!
  Global Systemic Crisis: In pursuit of the Impossible Economic Recovery !
  GEAB: China’s Great Escape from the Dollar Trap !
  Eurozone Faces Meltdown Under Sovereign Debt Crisis 2010 !
  Marc Faber: We Are Doomed!
  Dollar Crisis Looms if US Doesn’t Curb Debt !
  Marc Faber: The Next Thing You Need To Worry About Is The PIIGS! Eurozone Sovereign Debt Default Crisis!
  A Global Fiasco Is Brewing In Japan! 

end

Advertisement