Hi, this is more an economic question, rather than a cultural one. Since many of you are from the west coast USA, i would just like to hear first hand about the situation in California.

I have read that California is issuing IOUs since it doesn't have any money anymore:

Chase accepts IOUs

Since i collect money (as a hobby) : How do they look like ? Do they have Arnold Schwarzenegger or Michael Jackson on them And do other states in the USA accept them as payment ?

the previous california governor gray davis had the exact same problem that schwarzernegger is facing today: budget deficit. silicon valley businesses all went to asia i guess. names translation: schwarzer= plowman, negger=black, schwarzernegger= black plowman.

Thanks for the translation, but i know German

So, is the IOU going to be worth the amount printed on them? Especially if they will only be accepted till July 1oth? I've just looked on ebay, you can't get them yet, but yesterday was already a sort of holiday in the States.

well for companies that work with the state. either they take the 3.75 percent interest iou or cancel the contract that they currently have. I'd keep the business going if i were them. 3.75% is very good.

Yes, its even better than holding a 10 year US treasury

But California can't just continue printing IOU. They will either start devaluing, or on other other hand, be pressuring the US dollar itself some day

as long as this is a localize problem, it would be safe to hold the iou. texas for example have 11 billion surplus this year. 16 other states also have big surplus.

yes, it is still a local problem, not a catastrophe but still a great embarassment. but i think there are in the USA no constitutional rules what to do if California maybe goes bankrupt, not only unable to pay or unwilling to raise taxes / slash government spending. i think the last time this happened in the early 19th century to the individual States, nobody cared back then because the USA was very unimportant

it's probably has to do with uncontrolled immigration. california population is 40% hispanic who are not rich or wealthy. i wish the hispanic population could learn to be more business oriented like the chinese or korean it could cure the unemployment problem.

Yes, it's a great problem if they don't pay any taxes and only receive the welfare benefits.

But i read that the welfare recipients, not only contractors & service providers will also be paid in IOU. But not the elected officials. Why didn't they go ahead and be a shining example to their citizens in a time of hardship ?

I pay my propery taxes with my state refund. When the tax bill comes, I will send my local
treaserer an IOU.