The Telegraph (UK), and by extension the Drudge Report, are expressing wonder that, judging by the credit default swaps (CDS) market, "California is now priced as a greater bankruptcy risk than Slovakia 150."
As a former resident of both states, I can testify that this is an unfair slap...at Slovakia.
An economy that was widely predicted to fail at the time of Czechoslovakia's Velvet Divorce grew at a European Union-leading 10.7 percent last year. Unlike certain countries I could name, the domestic auto industry is booming. Inflation is at 7.5 percent, but trending heavily this past decade in a positive direction. And Bratislava's latest budget deficit figures look a damn sight better than Sacramento's $28 billion nightmare.
In the 1990s a common refrain among Americans journalists covering the great post-communist transitions was, "Would the U.S. ever tolerate economic austerity plans this severe?" In 2008, regrettably, I think we have found our answer.