Insuring against the possibility of a U.S. default is now pretty expensive
This final note today, a very brief word on the way out about credit default swaps. You’ll remember them from the financial crisis, basically buying insurance against the possibility of somebody defaulting.
Anyway, as just one example of how low U.S. debt is regarded by the market, it now costs about the same to insure Treasury bills against the possibility of default as it does to insure Russian government bonds. It’s actually cheaper to insure debt issued by Coca-Cola than it is to insure the full faith and credit of the United States.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.