State of unease: Californian public employees protest in Sacramento. ‘Furlough Fridays’, unpaid holidays imposed by governor Arnold Schwarzenegger, mean their Calpers pension fund must close for three days a month, at a time when it also faces falling returns on investments

Downtown Sacramento is hot, dusty and – considering it is the capital of California, the most populous state in the US – eerily silent. Signs of economic hardship are everywhere – shops are dark, many restaurants are boarded up. Only Best Collateral, whose shopfront promises “cash loans, fine jewelry and honest values”, has a steady flow of customers.