Credit default swaps betting that America will default on its obligations keeps going up and up and up:
(click for full image; and see this).
The failure of Citigroup has put the viability of the entire banking system in question.
And as a MarketWatch commentator points out:
Washington needs credit counseling. The federal government has an $11.32 trillion credit limit, and it’s carrying a balance of $10.66 trillion, according to a Treasury Department spokesman.Government officials stress there’s no borrowing planned as a result of Citigroup Bailout No. 2. But they also acknowledge the government doesn’t have any cash to cover Citi’s losses.***Throw in some tax cuts and declining demand for our debt overseas, and we have the ingredients for a toxic mix that could end up making our debt more expensive, even if we avoid default.“There’s no God-given gift of a ‘AAA’ rating,” Standard & Poor’s John Chambers told Reuters in September. “The U.S. has to earn it like everyone else.“