The Price of Credit Default Swaps on U.S. Treasury Bonds

A post by Paul Krugman on the price of credit default swaps (CDS) on bonds issued by the United Kingdom reminds me of the dark days of the financial crisis when otherwise serious people used the price of CDS on U.S. Treasury bonds as a measure of the risk of a default by the U.S. government. With the price of the CDS rising, we had some of these people getting very concerned about the prospect of a default.

As the more calm among us tried to explain, it's not clear that the price of a CDS on...