* From George Will’s latest column, which is kinda sorta about Illinois’ many problems…

Peterson, a professor of government at Harvard, and Nadler, a doctoral candidate also at Harvard, say collective-bargaining rights for government employees pose “a dramatically new challenge to the viability” of American federalism.

They cite studies demonstrating that investors’ perceptions of risk of default are correlated with the rate of unionization among government employees. [Emphasis added.]

So, some Wall Street “perceptions” mean that states ought to get rid of collective bargaining rights? There never would’ve been unions in the first place (not to mention a whole lot of other stuff that we take for granted) if governments had always followed Wall Street perceptions.

Then again, the bond market has pretty much dictated almost every big piece of fiscal legislation passed in this state for the past two years.

*** UPDATE *** Along these same lines, this is pretty crazy…

California, the world’s ninth- biggest economy by output, pays more to borrow from investors than John Deere Capital Corp., Idaho Power Co. and Caterpillar Inc., which have the same or lower credit ratings.

Two years after Moody’s Investors Service and Fitch Ratings changed standards to put municipal credits on the same footing as corporates, California and Illinois are among states that still pay more for debt than similarly or lower-rated corporations, according to data compiled by Bloomberg. Yet Moody’s says companies default at 86 times the municipal rate. […]

Defaults by governments remain fewer than those by corporate borrowers. Only 0.13 percent of municipal bonds rated by Moody’s fell into that category from 1970 to 2011, compared with more than 11 percent of corporate bonds. […]

Illinois, which like all states has the ability to impose taxes to raise revenue and whose bondholders have a first claim on the money, also hasn’t received lower yields.

The A2 rated state sold taxable bonds Jan. 11 with a yield about 132 basis points more than debt issued by Central Hudson Gas & Electric Corp. two months later, relative to 30-year Treasuries. The Poughkeepsie, New York-based company serves about 300,000 electric customers between New York’s northern suburbs and Albany, the state capital. It is rated lower, at A3, and its securities mature five years later.