Oh noes, The Governator can’t pay his bills! California’s already implemented unpaid furloughs, now they’re delaying tax returns by 30 days, and may be issuing IOUs. Or, if you prefer to fail it forward, you can apply it to your 2009 taxes, and my savvy California friends have pointed out that doing this, then trekking down to your HR office to up your deductions for 2009, might be the best way to ensure your money is actually returned to you from their grubby little paws.

We knew it was coming, but it happened sooner than expected.

The Californian government has been spiralling towards collapse for some time now. All the way back in December, the state’s finance director warned that – as above – IOUs might need to be printed. Only back then he said that they’d probably be needed by March. The situation has obviously deteriorated to the point that they’ve started to be used much earlier.

Here’s how sunny Cali looks in the muni market:

^^The above (from econompicdata) reflects California munis currently paying 1.4x the yield of the national average. Yeah, that means the market sees a lot more fail in Cali than in many other states. (1.4x the fail, in fact!)

Even despite the above, interest rates are so low right now that this still means the yield is a whopping, sexy **2.9%**. Who in their right mind would accept 2.9% in return for investing in a state that admittedly would like to be paying its residents’ income tax returns in leftover Ishtar DVDs?

Ahhhhhnold… why can’t you get this place in shape? What are you – an economic girlie man?