I am shocked to read in today’s Times that the state of California could go bust this month if an agreement cannot be reached on fixing a budget to cover its $42 billion ($28.4 billion) deficit.

This is the home of Silicon Valley and Hollywood. Its streets, once paved with gold, have no glitter left. Everyone is fighting for survival.

Unless Governor Arnold Schwarzenegger can reach a budget agreement soon, there will be a $346 million shortfall between the money the state has and the funds needed to pay for services and operations.

The economic crisis is so desperate that state employees have started taking monthly unpaid two-day holidays to save money.

To give you an idea how California compares to the UK, unemployment figures there are 9.3%, a third higher than the   6.1% recorded in the UK where we are suffering terribly. The large number of immigrant workers attracted to California is the reason given for its higher than average national jobless percentage of 7.2%.

Other reasons are that personal income tax provides more than half of the revenue that California needs to pay for services, but fortunes of the multi-millionaires of Hollywood and Silicon Valley have been eroded by falling markets.  It has also suffered some of the worst price falls in the country.

However, some of California’s problems are thought to be more closely related to its expowered citizens than the recession. Californians can originate and vote on proposals, a democratic right that has, over time, restricted lawmakers’ ability to juggle the state’s budget. To pass a budget, the legislature must have a two thirds majority, which gives significant power to minority parties with little interest in political harmony.

Surely these are desperate times which require strong and decisive leadership with professional fiscal expertise, rather than constant stalling and squabbling over decision making.

Californians should expect nothing less from the former Terminator, else he could find has terminated his own job.