Megan McArdle at the Atlantic says it's time for California and the nation to face facts: the state is bankrupt with a capital BANKRUPT:

California is completely, totally, irreparably hosed....Their outflow is bigger than their inflow. You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money that comes in during the booms, borrow some more, and then act all surprised when revenues, in a totally unprecedented, inexplicable, and unforeseaable chain of events, fall during a recession. You can blame the initiative process, and the uneducated voters who try to vote themselves rich by picking their own pockets. Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!....

We could let them go bankrupt.  And we probably should.

I am not under the illusion that this will be fun.  For starters, the rest of you sitting smugly out there in your snug homes, preparing to enjoy the spectacle, should prepare to enjoy the higher taxes you're going to pay as a result.  Your states and municipalities will pay higher interest on their bonds if California is allowed to default....On the other hand, I don't really see another way out of it.  If Uncle Sugar bails out California, California will not fix its problems. 

Matt Welch and Tim Cavanaugh, both former L.A. Timesmen, have been blogging up a storm on California's recent special election in which Sacramento's fiscal shenanigans were no-goed by those troublesome pests, The People. I blog on L.A. and Cali politics and ongoing fiscal crises over at KCET.org's City of Angles blog. And Reason magazine's May cover story is on how state fiscal difficulties are pretty much the fault of foolish profligacy by state governments, with cover boy honors fully and totally earned by Cali's own Governor Arnold Schwarzenegger.