Is California too big not to fail?

Jeffrey O'Brien at Fortune comments on a gathering of movers and shakers in Beverly Hills the other day, painting a grim picture of current conditions in the Golden State and wondering about the future of a state the size of the entire eastern seaboard.

If the world’s eighth-largest economy were a member of the proper religious order, it’d be time to call in a priest to administer last rites.

Name almost any serious malady and the state of California has it: the nation’s highest marginal tax rate coupled with an abysmal public education system; the most home foreclosures; a free-falling commercial real estate sector; lame-duck governor with no legislative support and a disdain for an annual budget process that he refers to as kabuki theater; unemployment somewhere between the official number of 12% and the whisper number of 18%; a 20% drop in year-over-year revenue; municipalities that have either declared bankruptcy (Vallejo) or are on the verge (Los Angeles); and a black-box permitting process that scares away business investment even while every week, 3,000 more taxpayers migrate to greener pastures.

Californians may be a can-do lot, but faced with all that evidence and much more, the political and economic leaders who spoke at the Milken Institute’s annual “State of the State” conference held yesterday at the Beverly Hilton could hardly have been more dour. “It’s a train wreck, and it’s getting worse,” said Bill Lockyer, California State Treasurer. Added former Assembly speaker Bob Hertzberg, now co-chair of governance reform group California Forward, “A high-speed train wreck.”

I must say that, after being out of the state for only a few months, the many "Cali-this" and "Cali-that" references that we've heard - ones that took us aback at first as they sound derogatory, even if they're not intended as such - are beginning to take on a different feel.