Iraq’s Debt Three Years Later

Three years ago, a study of low and declining prices on Iraq's debt by Michael Greenstone of MIT helped paint a bleak picture of the effectiveness of the surge, as, for example, in this November 2007 New York Times op-ed by Austan Goolsbee "In the Bond Market, a Bleak Prognosis for Iraq." But as reported in this week's Boston Globe piece "Gambling on Iraq’s Slow Rise from Ruin," a re-examination of Iraq's debt now leads Greenstone to change his view. Greenstone now says "The market’s assessment is that the prospects for a functioning Iraqi state in the future have improved dramatically.’’ The good news in this recent story is tempered a bit, at least for Californians, by the comparable assessment Iraq's debt and California's debt.