Wednesday, May 13, 2009

Big Mac: Better Credit Than Uncle Sam

Even though the headline is jovial (sorta), the content here is deadly serious.

Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar ---David Walker, former Gov't Accounting Office Chief

We're not done yet.

Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected, the government warned Tuesday. Social Security will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner, trustees reported.

Medicare is in even worse shape...--AP

Ganthner's last T-Bond auction largely failed--that is, he didn't manage to sell all of the offered US debt.

That is to say that buyers were walking away.

HT: Ace

No comments: