Golden Arches Safer Than Uncle Sam?

Word on the street is that the credit risk of the Golden Arches are better than Uncle Sam.

VS.

5 Year Credit Default Swaps on McDonald’s Corp are trading at 24 to 29bp while US Credit Default Swaps are trading 30bp. This means that it is more expensive to buy protection against a default of the US government than a bankruptcy of Mickey D.

WOW!

Comments

[Jackson Cash:]

12:01 Cinderella Bush.

No longer can you push around the American public, with "surprise" tactics and Wall Street muscle, "War on Money", or "Weapons of Financial Destruction".

The gig is up, you and your thugs will die as traitors.

NO BAILOUT FOR THE RICH!!!

2008 Sep 26 04:10 PM

[coastalpirate:]

wyosteven

1) Everyone is being bailed out, the American public and corporation's ability to borrow is what is being bailed out. Maybe we should save instead of spending more than we will ever earn? The American public has been over using credit cards, home equity loans, and yes voluntarily signing mortgages (forced by Wall Street Muscle?). Negative savings rate end like this.

2) Bailout for who?? Who didn't understand "variable rate" or "adjustable rate" would mean that your mortgage interest would go up. I guess we should be proud of the Trillions we spend on education. My poor Grandfather who was a factory worker had the intelligence not to over borrow and use a fixed rate mortgage. Today most people don't have any financial sense at all. Buy big screen TVs, I phones and Playstations when you have no money. Brilliant.

2008 Sep 26 04:26 PM

[Reinko:]

Oh oh Kathy, funny to observe that McDonalds CDS is now cheaper compared to Uncle Sam.

All I remember is that I advised the European pension funds to buy this insurance now it is so cheap (a few weeks ago the 5 year stuff was only 18 pips or 1.80 US$ for every 1000 US$ insured a year).

At that time of that advice the 10 year was already 30 pips and you did not mention in your article if 5 year CDF McDonalds was weighted against 5 year US government bond stuff...

You can also turn this model upside down and ask yourself the next question:

Is there anything, is there just one detail that will prevent a future collapse of US government finances?

Is there just one detail that will prevent collapse???

2008 Sep 26 05:57 PM

[Jackson Cash:]

@coastalpirate

I hear ya, but if you think the plan under consideration is more than a simple fabrication of the rich, you are utterly mistaken.

Simply because it affects all of us doesn't make it right! This plan is nothing more than a last ditch effort that even Helen Keller could see is a Bush orchestration.... haste... pressure... fear... surprise... one plan... are you seriously supportive of such a weak argument?

How would you explain Buffet digging in, JP Morgan acquisition, etc.? Give capitalism a chance, don't settle for some mafia crony's gloom and doom statements because it's HUGE. Perhaps you don't value freedom and settle for less.

How do you feel about 25%+ of the bailout going to foreign citizens?

2008 Sep 26 06:03 PM

[sickofthehype:]

wyosteven - We're all in this frustrated position together, as citizens, but I keep hearing complaints with no solutions mentioned. So we should 'teach those guys a lesson' with our own livlihood at that expense? Whether any of us like it or not, Wall Street makes the world go 'round. If banks aren't lending capital, business comes to a screeching halt. Meaning, we, as citizens are SOL, for a LONG time. How do you propose this crisis (appropriate word being used in the media for once) is solved without the existing plan of action? We all need to chalk it up as a lesson learned. Those who overspent, under-saved, and those on Wall Street who overspent, under-saved. Maybe if we spend (less than) what we make, and borrow less than what we 'can' (which we will be forced to now), new growth will be created through fundamentals and not phony money.

2008 Sep 26 07:58 PM

[Steven Hansen:]

hey, before we barbecue wyosteven, let's think. the "bailout" is doing nothing directly for the little person except to keep the credit market solvent. yah yah i know it is everyones' best interests - but i really thing the big bozo's are getting the bigger end of the stick.

this "plan" should have had something in it for the poor bastard that will suffer the most. the big bozo's will still be going out to eat and vacationing in the Caribbean. the poor bastard will lose his job, or lose a massive portion of his retirement, or lose his house, or not be able to repair his car - but he for sure will lose a good slice of his net worth.

we are entering a recession boys and girls. times will be tough for the poor bastard anyway. this bailout needs to address this inequity.

a society (capitalist or socialist or french) is no stronger than its weakest poor bastard.

2008 Sep 27 01:14 AM

[OldLimey:]

Maybe some of the biggest bailout beneficiaries outside banking will be those Boomers who use the inevitable Paulson rally as a (last?) chance to get out of Dodge.

2008 Sep 27 09:24 AM

[formerhawk:]

Sorry Limey but you can't get out of Dodge. There is no place to hide. I just wish someone would write an article about what will happen if we don't set up the $700billion auction. I don't think people really have any idea about the ramifications for everyone worldwide.

2008 Sep 27 11:11 AM

[Mafeking:]

Be very clear if the bailout does not go through it will affect each and every one of us - not only the rich, or the fat cats, or the CEOs.

Without credit businesses will not be able to function and begin to collapse. As business collapses and workers are out of work this will affect other business and so on. A vicious circle will ensue and all the smug "no bailout for the rich" guys will be standing in the soup kitchen queues like the rest of us.

Maybe these guys are on the wrong web site. Maybe they should be reading the "Workers International" or "International Socialism" where knowledge about how markets work is not uppermost in their minds.

2008 Sep 27 03:51 PM

[woodsey:]

Thanks for speaking up for us poor bastards, but we already know that wealth is created by work, period. What else is there?

2008 Sep 27 05:36 PM

[Did U Think...:]

Folks this bail out is not a solution to anything. It's like putting sawdust in a noisey differential to quiet it down long enought to sell it. What kind of sheeple must a person be to say things like "we are all getting bailed out here" and "we need this so we can borrow more"? Makes me sick how people have been brainwashed into believing that a debt based economy is anything other than a long term PONZI SCHEME. We don't need to borrow for everything we consume people, we need to save the money FIRST and then buy LATER. Sorry if thay does not jibe with the instant gratification consumerism that bush and his "ownership society" has brainwashed you into believing is sensical. You are not the owner of anything you own money on!!

This bail out will not stop any collapse. You can not pay off debt WITH MORE DEBT!! How stupid can you idiots be? Scared is one thing, but sheeple stupid is another! they are running a scam on you. They want to be bailed out so that they can sneak out the back door and set up operations in the next center of the world like Dubai (they are already setting up shop there if you have not noticed), China and India. They Fvcked us over and now you want to give them a golden parachute as they leave!

Sometimes I am truly ashamed to be an American citizen when I look around and see just how many of my fellow citizens are brain washed zombie automatons who actually think Bush cares one bit about anyone but himself. And NO MaCain is no better and neither is Obama. We have lost the 2 party system. It has merged into the Grand Socialist Elite Uniparty and the only one who opposes them is the great statesman Dr. Ron Paul.

2008 Sep 27 05:46 PM

[carey_jim:]

I'll have a Samburger with lies please.

2008 Sep 27 06:52 PM

[neeb??:]

I thought at one time credit was used only when needed for things like gas when you were out near dead falls WY and there was no bank to get cash nearby. You paid by the card and covered the debt when you got home... oh well excuse this little one for being so naive...

2008 Sep 28 08:12 PM

[pump it good:]

McD safer .... ? until they have another EColi scare like a few years before .. then the stock goes back to $18 !!

2008 Sep 29 08:17 PM