By now the finance term "credit default swaps" (CDS) is familiar, even if murky, to many Americans. The term is from the derivatives business and CDS have been used by Wall Street financiers to gamble on everything: from your mortgage to Lehmans Brothers.
Because of the unregulated nature of this business, the global markets are in disarray. Every financial sector has been touched.
The US government today announced it is using more taxpayer money to guarantee mutual funds: using, in other words, your money to guarantee your life savings.
Now is an appropriate time to ask: could the United States of America go bankrupt?
You may be surprised at the answers.
In fact, people have already asked this question:
Laurence J. Kotlikoff addressed this very question in the Federal Reserve Bank of St. Louis Review (July/August 2006), Is the United States Bankrupt?
Here's what Mr. Kotlikoff told the St. Louis Federal Reserve Bank last year: