Credit Default Swap Spreads for States and Countries

[muon2]

Last week the Economist posted a story about Illinois and other states growing CDS spreads, and then comparing that to the Euro-zone countries in distress. Minus Greece, the most troubled US states seem to find themselves in a similar position to countries like Portugal and Ireland.



An interesting part of the comparison stems from the fact that states and Euro countries both are tied to a parent currency and cannot declare bankruptcy. They note some areas of substantial difference, too, but I am fascinated at the comparisons of risk for this type of government on both sides of the Atlantic.

[Beet]

Excellent point. If the United States were structured like the euro zone, with a common currency but no political union, the dollar would be plunging and the markets would be panicking over default. On the other hand, if markets would be confident of German and northern European support for southern Europe, Europe would be in a lot better shape.

That's why Germany needs to stimulate its economy and strengthen its fiscal commitment to the south. George Soros is right.

There is one critical difference however-- countries like Greece and Ireland have traditionally received subsidies from the EU, while states like California and New York have traditionally paid much higher in taxes than they received from the federal government.

[Southern Senator North Carolina Yankee]

Excellent point. If the United States were structured like the euro zone, with a common currency but no political union, the dollar would be plunging and the markets would be panicking over default. On the other hand, if markets would be confident of German and northern European support for southern Europe, Europe would be in a lot better shape.

That's why Germany needs to stimulate its economy and strengthen its fiscal commitment to the south. George Soros is right.

There is one critical difference however-- countries like Greece and Ireland have traditionally received subsidies from the EU, while states like California and New York have traditionally paid much higher in taxes than they received from the federal government.

Well if it were Tennessee or Alabama but California is like our Germany in terms population the and % of the US economy that is in CA.