The CDS market now implies a 6% chance that the US will default on its debt. Last Summer CDS spreads were just a third as wide. Of course, we can always avoid default simply by running the presses, but the ensuing hyperinflation could be worse.
So which is it? Which would you rather see?
And if we have to restructure, would our foreign counterparties be willing to engage in a debt-for-equity swap in the United States?
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