[afortiori]

Not sure the Moody's data and projections support the histrionics of this writer. A 15% or even a 20% default rate on “speculative grade” bonds doesn't sound so cataclysmic.

First, hasn't a lot of this risk already been discounted in these instruments?

Second, definitionally, it's not clear if the "default" event measured by Moody is any interruption in payment. Often debts are simply rescheduled after "default". I think this journalist is using an important, but still narrow, historical comparison to stoke fear and controversy.

[afortiori]

For example, even with a 20% full “default” rate, if you are receiving above a one-fifth premium on the interest rate, you are ahead if you own a diversified portfolio of these bonds.

The interest rate risk-premium of the other 80% is sufficient to provide a superior return. The market prices and yields of these bonds reflect these changes and risks over time.

[screaminsunshine]

Not sure what you mean. But I do think the “system” the Politicians are trying to prop up is a failed ponzi. I can not see a way to save it other than taking the losses and starting over. Unfortunatly the voting public has been dumbed down to the point of no return.