Much of the losses in equity markets across the globe on Thursday were the result of poor economic data as well as concerns over the credit worthiness of the Unites States, UK and other western borrowing soverigns. The scare has been in place for weeks and months with the announcement of historically swollen stimulus packages and bailouts in the U.S. Yet until the Treasury actually began auctioning off debt to pay for the 1.9 billion in recessionary spending, the fears were written off as noise and only slightly discounted by the market.
While the U.S. is comparably better off than Britain, there is more pressure to keep the AAA credit rating to avoid a collapse of the World's strongest currency. It would seem that after enough time any paper currency, seen as most stable and held as a means of security, would eventually collapse. Keep a close eye on the behavior of U.S. Treasuries as the market prices in the likelihood of such an event.
Disclosure: No Positions