random2348

Shorting U.S. Government Risk

dkp,

Note that credit default swaps on Treasuries are quoted in Euros. See

www.bloomberg.com/apps...

It is not necessarily the case that one's counterparty has failed when the U.S. has failed. In particular, a counterparty not based in the U.S. might not have failed at the time of a U.S. government debt crisis.

Credit default swaps on Iceland's debt - also snake oil? They can always print more krona to repay their debts, right?

The CDS market is saying that the probability of the U.S. defaulting on its debt is very small but non-zero.