The Center on Budget and Policy Priorities has released a report "State Tax Changes in Response to the Recession" in which the center notes that "national recession has had such a devastating effect on state finances that states took in $87 billion less in tax revenue from October 2008 through September 2009 than they collected in the previous 12 months. This 11 percent decline, the steepest on record, resulted from the impact on tax collections of lost jobs, reduced wages, and lowered economic activity." And here we are, missing the forest for the Greek tree, and discussing evil CDS speculators' role in Greece barely able to make a €5 billion bond auction, when we should be all over the evil Municipal CDS speculators wreaking havoc in our own back yard.

And it actually gets worse: as we have pointed out, states are now running on fiscal fumes, as record unemployment insurance claims bleed the vast majority of state not only dry, but well in credit to the Federal government. "At the same time, the recession has driven up the number of people needing various state services. This, along with the requirement that states have balanced budgets, has increased the pressure on states to deal with the unprecedented revenue shortfalls in a variety of ways. Nearly all states have cut spending. In addition, most have opted for a balanced approach that includes revenue."

So while Obama is about to break all campaign promises about taxing everyone, let alone those who make under $250,000, individual states have already raised taxes by substantial amounts in an unprecedentedly short period of time.

In 20 states, tax changes are providing a significant boost to revenues — that is, they are producing additional revenue of more than 1 percent of the prior year’s total revenues. Ten of those states have raised taxes by more than 5 percent of the prior year’s collections: California, Delaware, Florida, Indiana, Massachusetts, Nevada, New Hampshire, New York, North Carolina, and Oregon. Personal income taxes and sales taxes, the two largest sources of state tax revenue, experienced the greatest changes. Overall, 13 states raised new revenue from personal income taxes, 17 enacted sales tax increases, 22 increased excise taxes on tobacco, alcohol, or motor fuel, 17 increased business taxes, and 24 increased fees or other taxes.

Surely no sane man can believe that the tax respone will be appropriate or meaningful, as ever more people decide instead to either cheat, or to outright decline to pay these exorbitant tax increases. But at least we can now proudly tell Papandreou that austerity has come to the US as well.

And to save the mainstream media some time in finding the next scapegoat, we present the Municipal CDX index.

Just in case it is not obvious to the ambulance chasers, here is tomorrow's MSM headline bold, ALL CAPS glory: OH NO, MUNICIPAL CDS IS SURGING! KILL THE CDS TRADERS, KILL THEM ALL!!!! IT IS NOT THE STATES' FAULT THEY ARE ALL BANKRUPT, IT IS THOSE SPLIT-TONGUED, SULFUR-SMELLING SPECULATORS WHO ARE WREAKING MARKET HAVOC!!!

Here's an idea - why not just sell MCDX? If you think the market is so mispriced, just take the other side of the trade.

Ugh, logic.

Full report detailing the collapse in state tax receipts.