On the claim that investors are today worried about a U.S. default



<p style="border-top-width: 0px; border-right-width: 0px; border-bottom-width: 0px; border-left-width: 0px; border-style: initial; border-color: initial; font-style: inherit; font-weight: inherit; margin-top: 10px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; vertical-align: baseline; border-style: initial; border-color: initial; border-style: initial; border-color: initial; border-style: initial; border-color: initial; border-style: initial; border-color: initial; border-style: initial; border-color: initial; text-align: left; ">On Irwin Stelzer's claim that investors are worried about a U.S. default: Stelzer: "All know that the crisis will be resolved by a last-minute deal.... All the negotiators, but not all investors. The gross value of contracts insuring against a U.S. default, although still small relative to the size of the Treasury debt market, has doubled from a year ago..." Each investor thinking they need insurance against a U.S. credit default event is matched by one who thinks they can make money providing such insurance. The volume is an indicator not of average investor opinion but of opinion spread. Average investor opinion can be read off of the price of U.S. credit default swaps. U.S. credit default swaps today cost 40% of what they cost in late 2008 and the same as they cost a year ago.