U.S. 5Y Treasury CDS price highest since April-CMA
http://www.reuters.com/article/idUSN0422261520100204
Lets just say that there is no economy nor is there a credit system anywhere on Earth if the US goes bankrupt.
The main problem with CDS is that the risks are interconnected. The most interconnected entity in the world is the U.S. Government. If the USA goes then what is the point? If I was long 5 Year CDS vs a US Default - Who Am I going to collect from?
Its a no win situation.
If the US goes down the drain. Its all a mute story. I bet you that GS is making a mkt on US 5 Year CDS.
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