Helpful Graphics of the Day

The Economist provided the helpful chart below comparing the credit default swaps spreads of several American states vs. several EU members.

And what the hell are credit default swaps?

I just found out too!

Credit default swaps are derivatives that investors use to protect against, or bet on, an entity being unable to repay its debts. The higher the spread, the less faith the market has that default can be avoided.

So let's take a look at the chart.



The good news of course, is that we're far from the worst on the list. Even California manages to beat out some of the less solvent EU members.

The bad news?

California is seen as being less capable of paying its bills than Italy. Italy under the sublime management of Silvio Berlusconi looks like this...