CA IOU'S - Can anyone explain how this works?

I have to admit, I love this site even though I live in CA (I'd like to purchase a NYC apt. as a second home someday...someday), and since there are so many smart financial gurus on this site, I figured I'd ask the same question here I asked on the Manhattan Beach Confidential blog (btw, a GREAT website...highly recommend it). Below is my question (MB = Manhattan Beach): Is anyone concerned that... [more]

I have to admit, I love this site even though I live in CA (I'd like to purchase a NYC apt. as a second home someday...someday), and since there are so many smart financial gurus on this site, I figured I'd ask the same question here I asked on the Manhattan Beach Confidential blog (btw, a GREAT website...highly recommend it). Below is my question (MB = Manhattan Beach): Is anyone concerned that the state treasury mentioned tonight (NBC Nightly News had the interview) that there will be more than $3 billion in CA issued IOU's in circulation by the end of this month yet none of the banks will be allowing customers to cash those IOU's as of today? Does that mean $3 billion is automatically removed from the CA economy over the next 3 weeks? What kind of effect does that have on the state economy (and obviously eventually RE)? Are there local MB businesses that are directly affected by receiving IOU's, and are their local MB businesses that rely on business from people receiving these IOU's? I'm asking these questions because I have no idea how state issued IOU's affect local and state economies (and eventually RE) when they reach the scale of $3 billion so quickly. Can anyone explain what happens here? [less]