Apparently the IOUs that were issued are tranferable.
They are now being bargained for pennies on the dollar. I wouldn’t do business with the state of California unless I was given cash up-front.
Which is exactly how those issuing junk bonds should be dealt with.
I'm seeing 70c to 95c on LA craigslist: http://losangeles.craigslist.org/search/sss?query=california+iou&minAsk=min&maxAsk=max
If I needed to pay a lot of money to some state office, I'd be happy to buy what I needed at face value to help out somebody who needed to sell them, but I would do it only as a three-person transaction right at the state office in question (in fact I might try this at the DMV later this month). And that's because I don't trust the state to pay me as a third party in October.
Also, and this may be more quixotic justification than anything else, enabling a market for these things allows the system to continue to limp along. It must fail!