The increasing risk of everything imploding into the financial singularity known as AIG has caused not only sovereign risk to blow out to never before seen risk levels, but also that of cities and states. New York City 5 year CDS was last seen trading at 335/355, implying (per the JPM recently oursourced black box model) a 50% chance of default in 5 years (granted assuming 80% recovery which may be a stretch). So for all those who are planning on buying real estate in the City, you may want to ride it out on rent for the next 3-4 years. One of the positive side effects of a municipal bankruptcy tends to be an 80% price cut on that 2000 sq. foot loft in Tribeca you have had your eye on (and getting mugged at gunpoint every time you leave it).
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