Dear California,

Welcome to the new economy! We’re all laughing our asses off watching!

On one side, IOU recipients are beginning to trade them like currency, forcing the California state treasurer’s office to issue guidelines if they are sold through eBay, Craigslist or other means.

Meanwhile, Bank of America, Wells Fargo, JP Morgan and Citigroup, among others, have said they will stop accepting the IOUs on Friday, according to a report in The Wall Street Journal.

Well, what did you expect? The recipients need the cash, not your paper, so in time-honored tradition, they’re selling a note due in the future for present cash–at a considerable discount, I’d bet. And real banks won’t touch these things–the risk is undefinable. (Remember, boys and girls, banks abhor risk. That’s why they used to ask for collateral before making a loan. Now, of course, they make the loan and sell it as quickly as possible, because the risk is known–and too high for their liking.)

But to make matters even more entertaining, the Fiddlin’ Government, in the guise of the SEC, is stepping in to help.

Speculation is rising over whether California’s tax-exempt IOUs, technically registered warrants, can be bought, sold and traded.

The Securities and Exchange Commission must first determine if the IOUs are securities to regulate them, said Ernesto Lanza, general counsel to the Municipal Securities Rulemaking Board, adding that the board was not working directly with the commis—sion on that decision.

“It looks like it has all the hallmarks of a security,” Lanza told Reuters. “If they are securities, I think they’re pretty clearly municipal securities.”And the laughter gets louder and louder. Next up–a rousing chorus of “We told ya this would happen!”

On a serious note, though, get ready. They can’t let California fall, no matter what. Whatever they do–including nothing–will make it worse. If you aren’t ready now, you time is getting very short.

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