CMA sources credit prices directly from the world’s largest and most active credit investors. Data from CMA show that the US leads the list amongst sovereign credit default swap wideners today.
The number for insuring is still relatively low compared to the lower credit countries with the highest default probabilities. Nevertheless, the evidence that the debt ceiling debate is increasing costs for the US economy is increasing.
Yesterday, I noted that Treasuries had lost their risk-free status as collateral at CME. Separately, JPMorgan Chase estimated the cost of a credit downgrade at $100 billion. A survey of 53 economists showed 30 believed that one of the leading ratings agencies will downgrade US sovereign debt ratings. See All S&P sovereign credit ratings for July 2011 here.
The longer the stalemate in Congress continues, the greater the costs will be.
Paul Waldie of BNN in Canada discussed this issue with Ryan Avent of the Economist and me yesterday. Watch the video clips here (Part 1 and Part 2) or click on photo below.