Cold as Ice

"I'm tapped out, Marv. American Express has got a a hit man looking for me."
--Bud Fox (Wall Street)

Iceland citizens voted thumbs down to covering losses of foreign creditors from sovereign bond defaults. Total US public debt currently exceeds $12 trillion, or about $40,000 per US citizen. Foreigners hold less than $2 trillion of that.

Imagine that we defaulted on it all. And that foreign creditors demanding that each citizen comes up with ~5 grand to make them whole on their share. (Also implies, btw, that each of us would be out ~$40K)

This is why some folks wonder why people buy sovereign bonds. Country bonds are unsecured and backed only by promise to pay. Yet, sovereign debt defaults run rampant.

Of course, in our case, the chances of default are pretty low as long as the US dollar is the world's reserve currency. Instead, chance favors a paper blizzard at some point.