Here at Randomly Noted, this blogger has been banging the drum about troubles in commercial real estate and municipal finance. This week’s Barron’s has a great piece by Jonathan Laing that looks at the troubles in muni land by taking a deep look at the pension obligations many state and local governments have. It’s stunning how underfunded many of these plans are today and the prospect of making them fully funded isn’t in the cards anytime soon.
Again, one of the pet-peeves of this blogger is that state and local governments have been very late in dealing with their big deficits and haven’t done much to contain costs. One way would be to get out of the pension business and create something more like what companies have done – 401K plans, for example, where you aren’t on the hok to guarantee a certain amount of money for each employee upon retirement.