California to issue I.O.U's

SAN FRANCISCO (Reuters) – California prepared on Tuesday to resort to issuing IOUs as the giant but cash-strapped U.S. state struggled to approve a new budget in time for the new fiscal year that begins on Wednesday.

The IOUs, which are notes promising payment to vendors and local agencies, or shutting down some public services, are among measures that California and other states may have to rely on as they contend with staggering budget gaps caused by the U.S. recession.

The Obama Administration is letting California--a state with a $1.8 trillion Gross State Product--plunge headlong into a fiscal nightmare that will also turn out to be a nightmare for the national economy.

This has to be a monumental game of political "chicken," because only an absolute imbecile would risk losing California's rich cache of 56 electoral votes.

Obama's chief political adviser, David Axelrod, might be an imbecile when it comes to the economy (no new stimulus, raise taxes to pay for health care, become a fiscal conservative and try to reduce the deficit when 13 million people are out of work), but he is not stupid enough to risk losing California's electoral votes.

I can only believe that this brinksmanship is to teach Arnold a lesson. If you recall, Schwarzenneger backed McCain. Axelrod wants the "Governator" to feel as much pain as possible before coming to the state's rescue. Unless of course Axelrod think's he's figured out a way to win without California in 2012. If so, it could be a grave miscalculation, both for his guy, Obama, and for the nation's economy in the meantime.

Here's what Arnold can do, and I've said this before: Declare himself President of California and secede from the Union. Then he can issue his own currency (which is what these I.O.U's are, effectively). After that, there'd be a short war and California would be brought back into the U.S. and war reparations would be paid to the state. (Possibly far more than what the state was asking for anyway.)

Arnold would have to go to jail, but hey!...he'd go down as a martyr and savior of the national economy!!