USA Is Now Twice As Likely To 'Default' Than Germany

Tyler Durden's picture

While the market turmoil (stocks down a few percentage points from all-time record highs) is being pinned on various factors (from North Korea, Trump, & Cohn to terrible retailer earnings and J-Hole anxiety), we suspect the real cause of market uncertainty is starting to peak through - the looming debt ceiling crisis that has now become too big and too imminent to ignore.

Of course, uncertainty in The White House is starting to make investors realize the chance of successfully navigating the debt ceiling crisis without a government shutdown are dwindling...


With the T-Bill market pricing in serious disruption at the end of September, the risk of a technical default for US Treasury debt is starting to rise and is now spiking relative to Germany.


In fact, as the chart above shows, the current 'risk' in USA debt/devaluation markets is twice that of Germany's - worse than at the peak of the shutdown in 2013 and worse than the shutdown debacle in 2015.

USA Default Risk premium has not been this high since Lehman.

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Running_Trillion's picture

No, US is at a far better position than germany

Haus-Targaryen's picture

As an American in Germany -- I can confirm both nations are sufficiently fucked. 

Thanks Bolsheviks. 

Herodotus's picture

Bolshevism will prevail in the end.

Swampster's picture







youarelost's picture

You are part of the problem

Swampster's picture




auricle's picture

They are all 100% expected to default. And they will. 

Haus-Targaryen's picture

If by prevail you mean "get taken out behind the chemical shed and shot", then yes ... they will prevail. 

Paul Kersey's picture

Default is nothing new for America. On August 15, 1971, when President Nixon announced that the U.S. dollar would no longer be backed by gold, the U.S. defaulted. That act was an admission that the U.S. was too broke to pay its foreign debts. Consequently, today's fiat dollar is a ponzi dollar, and LBO's, plus the financialization of everything, have left American workers with stagnant wages and deeply in debt. Meanwhile the banksters and klepto-corportists have looted the middle class, exported manufacturing jobs, and offshored trillions in stolen loot.

fockewulf190's picture

Thing is, everybody jumped on the unbacked fiat train after that event....and presto, we have legendary amounts of debt worldwide today (and increasing by at least $150 billion every month).

It's more than obvious that the entire worldwide financial system is going to utterly collapse and the Great Reset will begin. That there is even any time left to prepare amazes me on a daily basis. Prep while you can.

Cash2Riches's picture

The US from an immigration standpoint is far better off than Germany, in that regard, Germany is utter screwed. However, the US is not out of the fire yet, as the looming debt crisis is still there. It is baffling how gold and silver are not MUCH higher given all this chaos and turmoil.


Digital Alchemy Unwind to Prove Just How GROSSLY UNDERVALUED Gold & Silver Truly Are.

Justin Case's picture

Wouldn'be the first time for merica.

Subject:  .The Bankruptcy of The United States
United States Congressional Record, March 17, 1993 Vol. 33, page H-1303
Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House:

 "Mr. Speaker, we are here now in chapter 11.. Members of Congress are
official trustees presiding over the greatest reorganization of any Bankrupt
entity in world history, the U.S. Government. We are setting forth
hopefully, a blueprint for our future. There are some who say it is a
coroner's report that will lead to our demise.

 It is an established fact that the United States Federal Government has
been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1,
Public Law 89-719; declared by President Roosevelt, being bankrupt and
insolvent. H.J.R. 192, 73rd Congress m session June 5, 1933 - Joint
Resolution To Suspend The Gold Standard and Abrogate The Gold Clause
dissolved the Sovereign Authority of the United States and the official
capacities of all United States Governmental Offices, Officers, and
Departments and is further evidence that the United States Federal
Government exists today in name only.

The receivers of the United States Bankruptcy are the International
Bankers, via the United Nations, the World Bank and the International
Monetary Fund. All United States Offices, Officials, and Departments are now
operating within a de facto status in name only under Emergency War Powers.
With the Constitutional Republican form of Government now dissolved, the
receivers of the Bankruptcy have adopted a new form of government for the
United States. This new form of government is known as a Democracy, being an
established Socialist/Communist order under a new governor for America. This
act was instituted and established by transferring and/or placing the Office
of the Secretary of Treasury to that of the Governor of the International
Monetary Fund. Public Law 94-564, page 8, Section H.R. 13955 reads in part:
"The U.S. Secretary of Treasury receives no compensation for representing
the United States."

Herodotus's picture

Trump should veto any legislation to increase or suspend the debt ceiling.

Fiscal Smegma's picture

The US is the sole issuer of its own currency it has a MONOPOLY and can NEVER default. This talk is FUCKING STUPID!!!

Mr. Pain's picture

You wrote: The US is the sole issuer of its own currency it has a MONOPOLY and can NEVER default. 


Default can come another way. People lose confidence in the dollar.

Justin Case's picture

True dat, Venezuela is not bankrupt either.

NEOSERF's picture

Never before has one side been so incented to actually shut down the government on "behalf of the American people"...if the Dems can, they will.

NEOSERF's picture

Never before has one side been so incented to actually shut down the government on "behalf of the American people"...if the Dems can, they will.

Money_for_Nothing's picture

That would be shooting themselves in the head. So far they have been shooting themselves in the foot.

Justin Case's picture

Quit and let someone else more capable to take over - look what you reign over; would you like to be your own employee?

natxlaw's picture

Short and sweet, but if either of these defaults, what are the chances it does not take the other one down with it? 

virgilcaine's picture

Payable in Monopoly paper currency. BYOW..Bring Your Own Wheelbarrow.

Quinvarius's picture

There is literally zero chance of either defaulting on bonds denominated in money they can have printed, and that central banks are propping up with purchases.  ZERO.  Anything that happens will only result in money printing and know that garbage they keep telling you is good for you.

youarelost's picture

But 9 months ago everything was greatererere.  Me smells a setup

east of eden's picture

You know, I see that your comment is fairly typical of a large number of citizens in the US. Why don't you just stop with the paranoia about everybody in the world wanting to take you over (because they don't, who would), roll up your shirt sleeves and start trying to do something about the horrible situation you are in.

sudzee's picture

50 year experiment of print pure fiat to kill is comming to an end. 

Herodotus's picture

Bankruptcy brings freedom from debt.

bunkers's picture

Banksters will never give up on what is owed to them. They'll see us dead, first.

east of eden's picture

Maybe. But before you get there you would see your country destroyed from top to bottom. You can't just walk away from the 'game' that you decided the rules for.

Sizzurp's picture

Cue new world reserve currency in 3 2 1 ......

Money_for_Nothing's picture

Euro, Yuan or Rubble?
SDRs are mostly dollars.
Not enough gold/silver in the world.

Teja's picture

Correct. Now answer the question - which currency has risen in value relative to gold or the US$ some 100'000% over the last 5 years?

That one might become the next master currency of which all others will be derived.

east of eden's picture

No, I think it will be gold and silver. It has to be. The whole world needs at least a generation where goods are paid for in real money, mining activity is increased by 1,000%, and as the gold and silver comes into the treasury, part of it would be used to pay off the debt.

east of eden's picture

Sure there is enough gold and silver in the world. It is simply a matter of pricing it accurately.

Lard Dump Not's picture

Unpossible, MEGA political genious Trump will over see the largest tax cut for the wealthy in history while at the same time cutting the national debt in half. We are  saved! <SARC>

Money_for_Nothing's picture

True. No sarcasm. If taxes mattered in the way you think then the US couldn't run a trillion+ deficit.

No US market? Then world GDP goes down by 25% or more.

Special Drawing Rights are a joke backed by too little gold.
A world-wide gold standard would force gold confiscation worldwide. A tenth of an ounce of gold would be well over a thousand (euros or dollars) of today. Governments would confiscate all gold before the re-pricing happened (India?).

Won't cut the debt but will cut the deficit.

Right now US Government Treasuries are better than gold and cash to the Primary Dealers. Other countries want to buy US Treasuries so they can run a trade deficit with the US. Treasuries and US Government Agencies are the only financial assets that a buyer can not have a paper loss on (excluding TIPs; you can have a loss on TIPs if the US Government declares dis-inflation).

Force all the trade surplus nations into dollar denominated commercial paper. Threaten to crash the dollar market...Profits.

east of eden's picture

Well, world GDP might drop by 25%, BUT, each country would still have the resources that they DIDN'T sell to you, that they could sell to countries elsewhere.

No, I think what would really happen would be that like Argentina, you would be locked out of debt markets, locked out of most of the trade that goes on in the world, and for longer than your society could tolerate it.

Americans are not ones to lie down and roll over. After 6 months of subsisting on thin gruel and mouldy bread, you would see the Capitol Building burnt to the ground.

Money_for_Nothing's picture

The US only defaults if Congress wants it to default. All the rest is smoke-and-mirrors. Germany would just go back to the Deutschmark if default was an issue for Germany. Look up Lincoln's greenback.

Michael Pettis (do an internet search if you want his credentials) has shown convincingly that any country that wants to run a trade surplus must buy US Dollar denominated financial paper. Otherwise their customers end up with a dollar shortage. Petrodollar trade (do a search on that also if you want to know) doesn't supply enough dollars currently.

My point. If Trump and Congress get in a pissing war about raising the debt ceiling then any dollar denominated financial asset is going to go much higher until they resolve their differences. Could be 40+ billion dollars a month more.

Otherwise trade between the US and the rest of the world suddenly becomes balanced. US can't run a trade deficit without someone buying dollar denominated financial assets. 40+ billion a month. Trade War ON.

LawsofPhysics's picture

More to the point, let THE FED DEFAULT (the debt is FRAUDULENT anyway).

Return to the greenback and force those motherfuckers in CONgress to actually do their fucking jobs and balance the damn budget!!!


in the meantime...

"Full Faith and Credit"

agstacks's picture

Does Trump decide what to fund if the government is shut down?  Can anyone elaborate on that? 

DC Beastie Boy's picture

He could sign an executive order to keep it open then appoint Ron Paul as Fed Chairmain.  Now that would be some good shit!

UnKeynes's picture

Right after we get Jay Sekulow as Attorney General.

LawsofPhysics's picture

LOL!!  Germany is a beautiful house in a real shitty neighborhood.

"Full Faith and Credit"

tick tock motherfuckers

Money_for_Nothing's picture

Don't know if it is still true after the riots. US could get more German immigrants than the US wanted for years. Fumiest thing I ever heard is a German green card holder saying she would like to visit Germany but wouldn't want to live there.

Neighborhood analogy...Homeowners association too tyrannical...Looks pretty but you have to get approval to name you dog spot instead of bowwow. Don't even think about getting rid of that hideous bush.

Fireman's picture

Gee and there's silly me thinking USSA defaulted with tricky dicky way back in 1971 when the little guys in pajamas and flip flops kicked US in the a$$. Took a while for our "creditors" to catch on obviously.


DelUSion is US but the big 4 don't lie!


Broke as in....the jig is up and we's all headin' for Skid Row.

Money_for_Nothing's picture

France and others thought the US wouldn't do what France would do in the same situation. If times get tough France will go back to the Franc. The Brenton Woods agreement was a pipe dream like FDR's Social Security.