Citadel's Griffin: cost of U.S. default insurance is "unfathomable"

Investing.com -- Ken Griffin, the founder and CEO of Citadel, on Thursday called the cost of U.S. default insurance "unfathomable." He found it astounding that its price levels were comparable to those of some European countries.

Griffin stated at the Forbes Iconoclast Summit that he never expected to see the U.S. having a higher risk cost than countries such as Spain, Germany, or France. He pointed out that the credit default swap (CDS) market has some liquidity issues that affect prices. However, he still found the discussions about how closely the swaps are trading to be hard to believe.

According to data from S&P Global Market Intelligence, spreads on U.S. five-year CDS, which are market-based indicators of the risk of a sovereign default, were at 48 basis points on Thursday. This is in contrast to 50 basis points for Italy, 32 basis points for Spain, and 35 basis points for France.

Griffin voiced his concerns about the fiscal health of the United States, criticizing the country’s budget deficits of six or seven percent at full employment following years of growth. He labeled such financial management as fiscally irresponsible.

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