Are Michigan and Illinois like Greece and Ireland?

Credit Writedowns asks, ” Are Michigan and Illinois like Greece and Ireland?.”

The probability of default for Michigan reached a high of 800 basis points in early 2009 (approximately a 1 in 12 probability of defaulting over the next year) and was actually well above Greece and Portugal at that time. Greece’s default intensities ramped up in January 2010 with the Greek debt crisis and at the beginning of 2011 were over 1200 basis points (approximately a 1 in 8 probability of default over the next year). Ireland’s default intensity rapidly increased in May 2010 when the market started to realise that Ireland’s initial bailout arrangements were probably insufficient to prevent a default. Ireland’s default probability over the next year is well over 10%. Illinois and Michigan’s default probabilities are about half this level, with probabilities of approximately 5% of defaulting over the next year.