At this point, bankruptcy is probably the best thing that could happen to California. That state needs a CTRL-ALT-DEL of its entire bureaucracy. It’s been sad to see a state with so much promise be run into the ground by runaway socialism.
Sadly if Obama wins - more states will end up like Michigan and Calliee-Porn-eeha.
Bankruptcy will be a disaster also especially because bankruptcy will ripple across the entire economy. A California bankruptcy may be followed (or preceded) by bankruptcies in other rat paradises (New York, Michigan, Illinois). The impact of state bankruptcies on the muni bond market will be devasting. I think that the threat of bankruptcy has already had a large impact on the muni bond market. There may not be an option to bankruptcy. The rats will pump money into these states. However, these states have already hit an iceberg. Water cannot be pumped faster than the gaping hole allows more water.