Originally Posted by
Dune
This is in essence a notice of sovereign debt default (as the companies linked to the bond repayments are government and not private companies). If the U.S. suddenly told China they would not honor their pledge (a.k.a. "bond") to pay the Chinese back when their bonds came due, it would result in the end of the U.S. to ever borrow a dime again from any country. This would result in the end of the U.S. to exist as a country.
Oh do stop getting hysterical
First the DW debt is
not Sovereign debt - there was never any explicit contract to support it, the markets simply assumed that it would be covered.
And as for this idea that even if you do default of sovereign debt it is the end of existence of the country, well many countries over the years have defaulted but they are still here and still borrowing.
Yes this is serious but please keep a a bit of proportion - I would remind you that even though the cost of CDS has risen it still is far below the rate it reached in January - and the world did not end then.
Thats it - I'm off down the beach
