Willem Buiter always has a cheery perspective:
The state still services its outstanding stock of official debt with cash, which is why no formal event of default has been called yet, but de-facto California has already defaulted on its financial obligations and commitments by paying suppliers and employees with funny money rather than with cash. When the banks stop accepting the IOUs except possibly at massive discounts, which will happen soon unless an early resolution of the budgetary stalemate is achieved, the state of California will close down for business. Municipalities and counties dependent on state funds will follow suit. Before long the teachers won’t teach, the fire fighters won’t fight fires, the police won’t maintain law and order and neither garbage nor taxes will get collected. It will be a grand Hobbesian experiment.
For those who don’t recall their political philosophy, Thomas Hobbes, the author of Leviathan, came up with the happy phrase that the life of man is “solitary, poor, nasty, brutish and short”.