Thursday, October 10, 2013

What are the odds of a US default?

If US politicians cannot agree to raise the borrowing limit by 17 October, the US could default on its debt by the end of October. Markets all over the world could plunge, global interest rates rise, and investments curtailed, bringing the world into recessionary conditions [read more].

How likely will the US default on its payment obligations by the end of 2013? According to bookmaker Paddy Power, a $1 bet will win you $3 if the US defaults, and $0.20 if the US doesn't. This means the US has a 23% probability of defaulting, and 77% of not.