And Barack Obama wants to lay $1 trillion more each year on the backs of taxpayers. There is a limit, even a limit to the creditworthiness of American Taxpayers.
In other news, the cost of buying a five-year credit default swap (CDS) to insure against the possible default of U.S. Treasury bonds reached 100 basis points for the first time yesterday. In English, the price of insuring $10,000,000 worth of Treasury bonds for five years now costs $100,000 –up from just $5,000 one year ago.
Your editors do not exactly know what the 20-fold jump in CDS prices means, but we are pretty sure we know what it does NOT mean. It does NOT mean that the U.S. government is becoming MORE credit-worthy.
As the nearby chart indicates, the price of insuring Treasury debt against default now costs more than the price of insuring the debt of almost any AA or A+ rated company in the country. In other words, the Treasury is not quite as AAA as it should be, according to the buyers of credit default swaps.