California essentially bankrupt

Deficit forces California to issue IOUs

http://www.ft.com/cms/s/0/1940d18e-64cf-11de-a13f-00144feabdc0.html

States brace for shutdowns

http://www.latimes.com/news/nationworld/nation/la-na-shutdown30-2009jun30,0,1912245.story?track=rss

This is a big story for another reason. Whatever happens in CA will usually spread to the nation. We should expect CA problem of today to be US problem in less than 10 years. My guess is, by 2020, a major buyer of treasuries will be the Fed.