The United Kingdom's central bank released a report last month quantifying the indirect vulnerability of British banks to various European economies, arguing that the risks stemmed not merely from direct exposure to a defaulting nation's debt, but also from exposure to other banks and financial institutions that hold that debt.
In these trades, Mr. Kim was buying a type of insurance against the nations' defaulting; his investors, therefore, would benefit if problems in these nations worsened.
But defaulting on the nation's debts was once seen as unthinkable and nearly happened this summer, so worries abound.
And they point out that the threat of the nation defaulting on its debt is much greater than any scenario under the fiscal cliff.
At least Jon Huntsman tried to act like an adult toward the end with this statement: "I'm the only one on this stage who stood up for a deal, for the Boehner deal, against this nation defaulting.
The cost of insuring against the nation defaulting for five years has dropped to 677 basis points from 804 during the past two months, according to CMA prices, implying a 44 percent probability of Ireland failing to meet its obligations.
Walsh put himself on the map during the debt-ceiling mess by releasing a video calling on Obama to "quit lying" about the perils of defaulting on the nation's financial obligations for the first time in U.S. history.
Treasury Secretary Timothy Geithner recently warned Congress that defaulting on the nation's debts later this summer "would have a catastrophic economic impact," even as he informed lawmakers that the deadline for raising the debt ceiling has been extended until Aug. 2.
Last week, former Republican Congressman and current MSNBC host Joe Scarborough called Bachmann "a joke" because she had advocated for defaulting on the nation's debt.
To avoid the disastrous calamity that both sides of the aisle agree would result from our nation defaulting on its debts, I have compromised.
