Sovereign Default

Congressional Budget Office Doubles Estimated TARP Cost To $356 Billion

In what should likely be a much more publicized piece of information, the Congressional Budget Office doubled the projected cost of the TARP bailout plan to $356 billion, versus an earlier estimate of $189 billion: an increase of $167 billion on the taxpayer's dime. According to the March CBO report, the total revised deficit under the Obama budget will hit $1.8 trillion in 2009 (and then never go negative pretty much in perpetuity, in other words deficit forever):

Congressional Budget Office Doubles Estimated TARP Cost To $356 Billion

In what should likely be a much more publicized piece of information, the Congressional Budget Office doubled the projected cost of the TARP bailout plan to $356 billion, versus an earlier estimate of $189 billion: an increase of $167 billion on the taxpayer's dime. According to the March CBO report, the total revised deficit under the Obama budget will hit $1.8 trillion in 2009 (and then never go negative pretty much in perpetuity, in other words deficit forever):

More Observations: VIX - Sovereign CDS Divergence

As Zero Hedge postulated a month ago, the VIX - sovereign CDS inverse correlation is becoming more and more evident. Today's action is representative: as VIX continues to slowly trickle lower, US protection is 5 wider. With the G20 pledging trillions to battle every cough and sneeze of the markets, the question becomes what does all this mean for sovereign default risk, and thus VIX, and thus equity markets.

More Observations: VIX - Sovereign CDS Divergence

As Zero Hedge postulated a month ago, the VIX - sovereign CDS inverse correlation is becoming more and more evident. Today's action is representative: as VIX continues to slowly trickle lower, US protection is 5 wider. With the G20 pledging trillions to battle every cough and sneeze of the markets, the question becomes what does all this mean for sovereign default risk, and thus VIX, and thus equity markets.

The Inversion Of Corporate and Sovereign Risk, Or The Sovereign Basis Trade

The recent spillover of the threat of an Eastern European collapse, and its gradual spread into the Eurozone, has manifested itself best in the dramatic widening of sovereign CDS. The so-called socialization of risk had resulted in a tightening of corporate and bank default risk at the expense of the respective sovereign domiciles.