You saw my Stat of the Day: California now in top ten for highest government default probabilities in the world. Here’s a look at those CDS spreads for California over time – Michigan and Illinois are in the mix here too.
A friend who saw these numbers, asked "is this what they mean by up and to the right?" The funny thing is, the spreads were worse in February.
Wait for July and August for the budget cuts necessary to reduce these CDS spreads to be felt in the real economy. That’s when things will soften quite a bit.