In the USA, each state is required by federal law to have a balanced budget. Some states are run better than others. California has been historically mismanaged. Typically, balancing California's budget has involved creative, one time only accounting gimmicks to create the illusion of balance where there is none. Now it's time to pay the piper, except the politicians don't want to. They are slashing aid to the poor because the poor have no lobbyists. They are keeping laws that favor the rich, however. Much of this aid slashing is along the lines of accounting gimmickry, since the long term costs will be much greater. I think the end game is a default on debt that's rated "worse than junk". That might lead to a flight out of ALL US debt, including Treasuries, possibly sparking a debt default on US debt, and some other countries' debts too. That would effectively nuke the global financial system. While the ensuing execution of those responsible would be welcome, the parts where millions starve and riots occur every day and the world's cash reserves vanish is not so great.