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June 2011

"Misundertanding the Greek debts and CDS"

Tim Worstall explains a key difference between the CDS market in 2008 and now.

Everyone who is going to lose money on a CDS has already lost money on that CDS. This simply will not work out like AIG Financial Products. . . . We know who will lose for we can go and count who has already handed over those margin calls. In fact, we know who will lose because we can work out who has already lost. Just look at the cash balances.

For another interesting article related to Greece, see "For Many Greeks, Here's What Austerity Will Look Like".

If you think you’ve got it tough living in America, just be glad you’re not going to be in Greece as that nation begins to confront the true reality of austerity. . . . 

From a 15 percent cut in public wages to cigarette and alcohol taxes to Social Security reductions and means testing, the Greek measures will instill pain, necessary though it may be, for years to come.

"Obama Didn't Save Union Jobs, He Saved Union Pay"

"Contrary to popular belief, bankruptcy does not mean companies close their doors and send employees home. This is the false message President Barack Obama tried to sell on his victory tour of Detroit. If General Motors had gone through a normal bankruptcy without taxpayer bailouts, there would still be GM jobs--maybe even more than there are now. We do not know because that was the road not taken."

Sometimes, formal education just doesn't seem to pay

Good question:

The Chronicle of Higher Education recently conducted a study finding that California has the most educated Legislature with most legislators earning a bachelor’s degree or higher.  If California’s Legislature is so intelligent and educated, why is the Capitol and the state economy in such bad shape?

Interesting detail:

When comparing the top and bottom 15 states to the Mercatus Center’s Freedom in the 50 States Economic and Fiscal Freedom Indicators, the statistics show that the bottom 15 educated states have a higher economic freedom and fiscal freedom score than the 15 most educated states.  Fiscal Freedom is measured by spending, taxation and fiscal decentralization.  Economic Freedom is a measure of individual liberty, government spending, income taxes and sales taxes. South Dakota, which has one of the least educated legislatures, ranks number one on the economic freedom scale due to its high fiscal decentralization, and low levels of taxation and spending. California, which ranks 47th out of 50 according to the Mercatus study, “not only taxes and regulates its economy more than most other states, it also aggressively interferes in the personal lives of its citizens.”

Yeah, yeah, correlation is not cause. But still, it's . . .  suggestive.

Link via the Big Henry.