Apparently the markets think that U.S. risk of sovereign default is steadily creeping up. Hedge fund blogger Zero Hedge puts up the numbers here. According to the numbers from finance calculator company Markit, U.S. is a greater default risk than Japan or Germany, among others.
A default would destroy the U.S. economy and TARP recipients, in particular. The Piqqem Sentiment on major TARP holders is more or less neutral, although the bankruptcy of the U.S. Treasury might change that, no?
The two big i-banks, Morgan Stanley (NYSE: MS) and Goldman Sachs Group, Inc. (NYSE: GS), appeared (ironically) among the best positioned, as they are already positioned to pay back TARP money and have marked down their portfolio to reasonable levels.
US Bank Corp. (NYSE: USB) is more or less bulletproof by virtue of its avoidance of the all funny sub-prime lending and bad credit awards that marked the last two years. Watch for further widening of CDS spreads as this could presage a truly awful event that would make even T-bills a less-than-safe haven. Can you say gold and oil, folks?
Friday, February 27, 2009
Could U.S. default on its national debt?
From Bloggingstocks.com
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