So writes Louis Basenese (wallstreetdaily.com) in edited excerpts from his original article* entitled A $7-Trillion, Currency Catch-22.
[The following article is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Basenese goes on to say in further edited excerpts:
Falling credit-default swap prices
Credit-default swap prices, which represent the cost to insure against a U.S. default, dropped to 22 basis points recently. That’s down from a high of 55 basis points right after the downgrade.
Increasing debt levels
More amazing than the drop in default risk is that it came in the face of steadily increasing debt levels – and the fact that there’s no end in sight to Washington’s borrowing ways.
Rising Debt-to-GDP ratio
S&P now expects the amount of general U.S. government debt to hit 84% of GDP by 2015, up from their previous projection of 79% at the time of the debt downgrade, so America’s finances have only gotten worse, not better.
Strengthening U.S dollar
Against that backdrop, it’s even more unfathomable that the U.S. dollar has been on a tear.
The world’s most despised currency is up 11% since the downgrade, as represented by the U.S. Dollar Index and, so far in 2013, it’s on track for its biggest gain in five years.
Question: So whom do we have to thank for the unexpected resiliency and strength and in whom should we put our trust for the future?
Answer: A group of do-nothing elected officials.
Indeed, we’re on a crash course with another debt ceiling debate, which is precisely what precipitated the first debt downgrade by S&P……
Talk about the great American debt downgrade debacle that wasn’t!
Ahead of the tape,
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
* http://www.wallstreetdaily.com/2013/08/06/debt-ceiling-dollar-yuan-yen/ (© 2013 Wall Street Daily, LLC. All rights reserved.)
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