Previously, we posted "Largest Short in History." The posting described the obligation of the US Government and Taxpayers for trillions in medical benefits. No funding or reserves for the these obligations exist except for future taxation.
This piece http://www.latimes.com/business/la-fi-calstrs29-2010jan29,0,4882943.story in the LA Times describes the coming shortfall in teacher pensions. This is on top of shortfalls in Calpers (CA public pensions).
Pensions can be described as a market as follows: Retirees demand pension payments. Funding is supplied from trust funds and trust fund earnings. What can go wrong? The army of retirees grows more rapidly because of demographics. Earnings of trust funds fall short because of poor market conditions. Trust funds are underfunded because of budget imbalances.
Step back and look at the landscape of pensions...public and private. All of them fit the model described in the previous paragraph. Public pensions and failing private corporation pensions are technically insolvent in many many jurisdictions.
The silence of political rhetoric has shielded pensioners and the public from this reality. But the market always speaks...even after long periods of silence.