California Default Watch Initiated

I've been quiet about California just because there hasn't been anything to add. The State went into a terminal dive last summer as covered by the Daily California Watch Series.

Now even the longtime insiders are seeing all other possibilities foreclosed:
Dan Walters in the Fresno Bee:

If some of the bleaker economic forecasts kicking around are accurate and/or the state doesn't act quickly to close the gap, Taylor's $20.7 billion problem could easily balloon to $25 billion or more. Even more ominously, as temporary tax increases expire and deferred spending promises come due, the state faces annual deficits in the $20 billion range for many years to come, Taylor says.
The battle lines are already forming on whether to deal with the crisis with more spending cuts, more new taxes and/or more gimmicks.
...
They've scraped the bottom of the gimmick barrel, voters are livid and new taxes are functionally off the table. This will be one of the bloodiest skirmishes the Capitol has ever seen — with the only option being that the most populous state in the nation default on its debts.

And Federal receivership won't fly either. The terms will prove intractable and the other States will howl.
And vat does our Leader, da Governator haf to say?:

As pieces of the July state budget solution begin to unravel, the Republican governor said judges – especially on the federal level – are preventing California from solving its problems.

He complained in particular about judicial actions that have struck down some state worker furloughs, required reductions in the prison population, imposed restrictions on water delivery in the Sacramento-San Joaquin Delta and this week blocked cuts to in-home care services.

"They are going absolutely crazy," Schwarzenegger said of judges. "So we have to have a very serious conversation with the federal government, because they have to let us run the state." [from Fresno Bee last month.]

Want an example of "out of control" judges? This also from the Fresno Bee:

Tuesday, Oct. 20, 2009 - 2:43 pm
The California Redevelopment Association filed suit in Sacramento Superior Court today to block the state Finance Department from carrying out a $2.05 billion shift of tax increment funds from local redevelopment agencies over a two-year period.

California's adopted budget for 2009-10 seeks 1.7 billion in funds from the state's redevelopment agencies to help finance schools and calls for shifting another $350 million in the next fiscal year. The suit challenges the constitutionality of the budget language and cites state plans to use the money for non-redevelopment purposes.

The association prevailed in an earlier lawsuit challenging 2008-2009 budget language that would have shifted $350 million in tax increment funds to the state.

Yeah, stealing and getting caught is the judge's fault.