With California the largest economic engine and the US, and a GDP that rivals most countries, today is an important event as the world slides into a greater depression. California cannot pay it's own bills and will issue IOU's.
What this REALLY means is, California can't borrow it's way to pay for today's bills, and therefore needs to figure out what to do. After all, California and the USA has borrowed with the world's largest credit cards to pay it's bills for decades.
I stated earlier in this fiscal crisis that once the federal government deploys all the "Excess" credit it has to the banks, there won't be money left for funding states and federal programs as financial crisis deepens. It will be interesting if Obama deploys cash to California in an attempt to delay - and deepen - the realization of financial problems world governments face.