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It is tempting to think that the US is and will always be a superior market in terms of the credit default profiles of businesses and individuals, but that would be a false assumption in a global economy. As the US economy adapts to the realities of competition in the international marketplace and a government in Washington that does not know how to govern public spending, the average P(D) rating for American companies and business is slowly falling, even though current loan default rates at US banks are at historic lows. I also would hold up for your consideration the explosive growth in sub-prime lending and related “hybrid� mortgage products as evidence of the gradual downward trend in the aggregate credit quality of the US economy. It seems fair to predict that as the US economy progresses through 2006 and 2007, and the Federal Reserve Board in Washington continues to raise interest rates to maintain the appearance of low inflation, default rates at US banks for obligations such as home mortgages and commercial loans will very probably revert to the mean and then some, hopefully without too much damage to the economy or the banking system. We can thank the Basel framework and the Basel Committee on Bank Supervision for giving us commercial banks and other types of lenders which have the capital buffers and risk procedures necessary to adapt to such a changing economic environment, but we should scold our spendthrift government in Washington for making our economic cycles every more volatile due to the massive overhang of public debt and related monetary expansion.