The six with rankings more worrisome than California are Venezuela (the worst), followed by Argentina, Pakistan, Greece, Ukraine and the Emirate of Dubai. California ranks ahead of the Republic of Latvia, the Region of Sicily and Iraq. See the list under "Highest Default Probabilities." (The report is issued by CMA Market, a "credit information specialist" with offices in London, New York and Singapore.)
California Treasurer Bill Lockyer says the state has never defaulted, he wrote in a letter to Goldman, Sachs & Co. So I guess that means we shouldn't worry. But Lockyer is hardly setting the facts out fair and square, according to Financial Times columnist Spencer Jakab, who compares Kazakhstan with California and writes:
Kazakhstan, with the world's 11th largest oil reserves, an economy that grew more than 8 per cent annually from 2002 through 2007 and unemployment of just 6.7 per cent looks positively vibrant next to the Golden State's joblessness of 12.4 per cent. And Kazakhstan's modest budget deficit and $25bn rainy day fund make it a paragon of fiscal virtue compared to a state forced to pay bills with IOUs last year and possibly again this summer. . . . If it were to raise taxes or cut public services, wealthy Kazakhs could hardly defect to Kyrgyzstan the way Californians, already facing some of the highest levies and worst schools in the nation, might decamp to, say, Utah."See Jakab's full column "California and Kazakhstan - just who is the underdog?" (Registration, which is free, is required.)
