In a recent AEI working paper I've shown that the typical state employee public pension plan has only a 16% chance of solvency. More public pensions have a zero probability of solvency than have a probability in excess of 50%. When public pension assets fall short, taxpayers are legally obligated to make up the difference. The market value of this contingent liability exceeds $3 trillion.
Andrew Biggs of the American Enterprise Institute reports in the WSJ
What we have in the government channel is a relaxation method of finding the right balance of local vs central government. In a Minsky sense, the Obamacare purchase was the last great trade in the Treasury bubble. How long can state government holdout while it digests the new entitlement attempt? The channel equalization is going to take two years, for the next step. There are default premiums yet to be priced in the USA over the next two years for state debt.
Local metropolitan traffic planners:
Avoid getting entangled in the pension mess, keep hiring to a minimum and focus on technology development and trials, keeping costs to a minimum. Anticipate price deflation in technology. I would avoid the big concrete and steel projects, start thinking about reserving bandwidth on roads today, for sale today. California Bullet trains are toast.
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