November 26, 2008

Armageddon Alert

The 5 year graph of the CDS spread on the debt of the USA is gaining steam reports FT Alphaville This spread is a measure of the risk of default of the USA'S debt. When this spread rises, investors are willing to pay higher premiums to insure their debt--however in this case it would ensure the debt of the USA. Currently the USA is at 44BPS or .44% of the transaction.

To put this into perspective:
AT&T Mobility (28bps)
Baxter International (24.5bps)
Campbell Soup (31bps)
Ingersoll Rand (40bps)
Lockheed Martin (30bps)
McDonalds (29.5bps)
Wyeth (35bps)