Who Said You Could Get Up? Bend Over!

If public employees retire at age 50 on a millionaire's income, you'll just have to pay more taxes, and work a few years longer to pay for it. You didn't actually believe that they were working for YOU, did you?

Many of the largest U.S. municipalities are understating the true size of their pension obligations by using inappropriate accounting methods, leading to $574 billion of unfunded pension liabilities, according to a study released Tuesday.

Those unfunded pension benefits are in addition to $3 trillion of unfunded liabilities that the study's authors have said exist among state pension plans. _WSJ

Reason

The only real choices you have are to either go expat, or go Galt. Otherwise, you're going to be paying for these people's sea cruises, motor homes, and summer cabins for the rest of your lives.

The result is a growing wave of pension shortfalls that threatens to wash over many local governments in the near future, the report said. The authors calculated that each household in the 50 cities and counties they studied owes an average of $14,165 to current and past government employees for their pensions.

The report says that five major cities -- Boston, Chicago, Cincinnati, Jacksonville and St. Paul -- have pension assets that can pay for promised benefits only through 2020.

Philadelphia, for example, has assets on hand that can only pay pension promises through 2015, the report says. But that assertion is disputed by some Philadelphia pension officials. _WaPo

Municipal bondholders are watching these developments closely (PDF), in the hope that they will not get burned by cities in the same way that Obama burned the auto company bondholders.

The US Democrat Party has been in bed with labour unions since forever. The relationship between the US DP and public sector unions is particularly close, and will only grow stronger as the pension crisis forces the unions to call in their markers. This will result in DP politicians losing more battleground elections, although most of the big city precincts are DP dominated (and bleeding cash).

Keep a close eye on Pension Tsunami for the latest developments.