Individuals can run into money problem if they don’t take care of their personal finance. It seems that many cities and states are not immune to bad money management after years of underfunding the pension and hiding the problems. Attracta Mooney writes on Financial Times: “The US public pension system has developed a $3.4tn funding hole that will pile pressure on cities and states to cut spending or raise taxes to avoid Detroit-style bankruptcies.” Just like individuals, cities will have to face bankruptcy if they keep on spending and can’t deal with the funding shortfall. “I do believe that US cities and towns will continue to suffer, and there will be additional bankruptcies following the examples of Detroit,” said Olivia Mitchell, a professor at the Wharton School at the University of Pennsylvania. (ft.com)
Now kindly put up the tab for all US private pensions that have or will fail.