“This NBER paper by MIT’s Michael Greenstone reinforces Paul Krugman’s message…. that the “smart money” is betting against Iraq’s survival. According to this analysis of the Iraqi state bond market, since the Surge began there has been “a 40% increase in the market’s expectation that Iraq will default. This finding suggests that to date the Surge is failing to pave the way toward a stable Iraq and may in fact be undermining it.”

More by Michael Greenstone of MIT at the Social Science Research Network