Archive for August, 2011

Debt Default Insurance

Monday, August 8th, 2011

The Credit Default Swap market is where one goes to buy insurance against a bond default. There is now more than a handful of companies whose default insurance premiums are less than that of the U.S. government. Here is just a sampling–ordered from most safe to least safe, but all safer than the U.S.:

  • Merck
  • Google
  • Coca-Cola
  • Oracle
  • Baxter, Intl.
  • Microsoft
  • Pepsico
  • Colgate
  • United Parcel Service
  • Raytheon (interesting, considering who pays them)
  • Norfolk Southern
  • Wal-Mart Stores
  • Monsanto
  • Nike
  • Consolidated Edison
  • John Deere

Effectively, the market has appraised the risk of default for these companies and has judged them to have less credit risk than the U.S. government, which has the ability to levy taxes, confiscate things–including companies and countries.


Weekly Recap & Outlook – 08.05.11

Friday, August 5th, 2011

Tower Private Advisors


  •  Stocks decline
  • Issue-o-Meter
  • Employment increases…barely (more…)

Wierd headline: “Safety in Emerging Markets Bonds”

Monday, August 1st, 2011

It used to be that a headline like the one attached to the story below would have seemed incongruous. Now, we just shake our heads and realize it’s a sign of the times and the current state of affairs. (Click on the story for the full version.)


Given the state of global finances, perhaps we shouldn’t find this surprising. Here is a look at debt-to-GDP levels for advanced and developing countries, the constituents of which are defined by FTSE. The developed countries are represented by the blue bars, while the emerging countries are shown in green. Averages are shown in the respective colors.