Think Europe's Financial Discipline Is A Joke? America's Just Became Even Worse

Here’s an interesting piece of perspective, courtesy of Mr. Market.

It appears the Germany crisis is fading, partly thanks to the rock solid Angela Merkel, and fears of a U.S. debt crisis are edging back into the lime light, if the views of credit default swap traders mean anything:


As the folks at Standard Poor’s Valuation and Risk Strategies division noted in a research note Monday, the difference between the spread on U.S. sovereign credit default swaps and an equivalent benchmark for AAA-rated euro-zone sovereigns flipped into positive territory March 12. As U.S. CDS spreads expanded to their widest levels in two years, that cross-region gap blew out to 5.7 basis points last Friday before narrowing to 4.7 Tuesday.

Given that the euro is making new near-term lows against the dollar right now, perhaps it’s time to consider closing the euro short and going long. America’s problems could soon overshadow Europe’s once again.

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