Yesterday Professor Joseph Stiglitz stated on BBC Newsnight, in response to a suggestion resulting from "speculators" (i.e. money markets) behaviour that Greece might default on its debt:
"The absurdity of these speculators is illustrated by what's happening in the United States: the spread, the CDS', the bets on a default in the US government are going up. Does anybody believe that US government is going to default?
The fact that US government can print money, you can bet [on it], or whether there is inflation. But to bet on a default in the US is utterly absurd." [Starts at around 13:25 into the programme.]
With the greatest respect to Professor Stiglitz, I would not dismiss the "speculators" behaviour that easily as "absurd". They are not poor people working in an irrational way. In the past their behaviour was a really good sign of the forthcoming events (including governments' intentions). Do we remember how the Bank of England was building the "firewall" in September 1992 to protect the pound and how it eventually ended? And who made and who lost the money? That what the Germans appear to be doing now. Good luck to them! To answer Professor Stiglitz' question directly: "Does anybody believe that US government is going to default?". The author of this blog believes that there is a realistic risk of this happening, growing with every dollar borrowed by the US government. For more read "A US way out?"