America's Pension Bomb: Illinois Is Just the Start

Tyler Durden's picture

We've written quite a bit over the past couple of months about the pending financial crisis in Illinois which will inevitability result in the state's debt being downgraded to "junk" at some point in the near future (here is our latest from just this morning: "From Horrific To Catastrophic": Court Ruling Sends Illinois Into Financial Abyss).

Unfortunately, the state of Illinois doesn't have a monopoly on ignorant politicians...they're everywhere.  And, since the end of World War II, those ignorant politicians have been promising American Baby Boomers more and more entitlements while never collecting nearly enough money to cover them's all been a massive state-sponsored scam.

As we've noted frequently before, some of the largest of the many entitlement 'scams' in this country are America's public pension funds.  Up until now, these public pension have been covered by stealing money set aside for future generations to cover current's a ponzi scheme of epic proportions...$5-$8 trillion to be exact.

Of course, the problem with ponzi schemes is that eventually you get to the point where the ponzi is so large that you can't possibly steal enough money from new entrants to cover redemptions from those trying to exit...and, with a tidal wave of baby boomers about to pass into their retirement years, we suspect that America's epic ponzi is on the verge of being exposed for the world to see.

And when the ponzi dominoes start to fall, Bloomberg has provided this helpful map to illustrate who will succumb first...


Of course, if you live in a state like South Dakota, you may take some solace from the fact that your public pension is fully funded...don't. 

Once the dominoes start to fall, and they will, those "ignorant politicians" we mentioned above will think they're doing the right thing when they attempt to "socialize the issue" with federal bailouts and tax hikes.  Unfortunately, this is one crisis that will be too large for even American taxpayers to bailout.

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ThrowAwayYourTV's picture

No Shit! Tell me something I didn't know.

jackstraw001's picture

Paging Merideth Whitney, paging Merideth Whitney. Your vindication is in process...

DavidFL's picture

vindication - 10 years on, thats vindication?

Manthong's picture


When I think of all of those retired Democrat Illinois bureaucrat managers and school administrators living on a lake in Kentucky or Tennessee fretting about their six figure government pensions, I have a twinge of sympathy.


luky luke's picture

America's robber barons are simply THIEVES and have turned our own money against us.

tmosley's picture

Bitchez better get some cryptos.

new game's picture

ruling with a pen has come to it's end. we are at the junction whereas the pen will be replaced by many much moar effective instruments of imeadiate law. devolution to violence. we are seeing the beginning stages of this. embrace it or bend over. the choice is yours to make.

playit's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

All Risk No Reward's picture

Remember, that "funding" percentage is invested.

When the debt-money bubble pops, well, those numbers will be cut in half... at the very least.

Property tax is going to be the new mortgage.

Those with mortgages on top of their mortgage, well, welcome to the fulfillment of UzBanksterstan.

lolmao500's picture

Thing is, all those thieves profited from their loot for YEARS if not decades already... they need to be sent to prison... All those former lawmakers and state officials who lied to the public, all their stuff seized and all their asses sent to jail

yogibear's picture

All those retired HS teachers collecting well over $100,000/yr in a lower cost of living state.

While laughing at anyone bringing up the idea benefit reduction. The retired teachers and public workers point to their state constituional pension protection.

fattail's picture

This is when the runs starts.  If i was one of those bureaucrats or school administrators I would want to be the first to hit the panic button and cash out of that pension, before the haircuts starts.

Seasmoke's picture

I rather be 10 years early. Than 10 days late.

NoDebt's picture

And you have 20 more years of seeing this shit happening over and over and over ahead of you!

Mr 9x19's picture

ca = ny in worse shape.

do not expect ca to be in green

Lorca's Novena's picture

CalPers, along with every other corrupt affirmative action employee and teachers unions.... surprised the cat isnt out of the bag already. 

Ex-Oligarch's picture

Wonder how much CA dems had to pay Bloomberg to color the state grey?  The "unknowns" on the chart should have been flashing fluorescent yellow.

GunnerySgtHartman's picture

I am impressed that NY is as well-funded as it is.  I expected that state to be much lower.

NoDebt's picture

'No Data' for California.  Beware the gray states.


HungryPorkChop's picture

Spoiler Alert!  Progressive states lead the pack.  I wonder how those santuary cities will fare when the debt bubble comes for them? 

Bubble Man's picture

I read zero hedge quite often but rarely post.  I agree that the liberal states/ideology of giving away free shit isn't necessarily the best policy as it doesn't incentivize hard work.  BUT the current crony capitalisim model in America also does not incentivize hard work due to overbearing taxation for productive labor.  Unless of course you work you are apart of the .001% that skims off the top that works in finace, banking system, or stock market which is non productive work.  Then your tax rate is lower than those making less than $30k.

We also need to keep in mind that social programs are insurance for the .001%.  Especially in a country full of guns, pitchforks, and other such tools.

I also think these gov't workers were promised pensions.  The biggest problem I think is that the central banks or gov't state is unable to increase their target inflation target high enough to pay these unpayable pensions.

And lets not forget, the private sector does the same thing.  Recentally GE admitted to be underfunding their private pensions drastically.  That didn't stop their huge billion $$$ stock buyback that could have funded their pension shortfall.

Of course, this is mainly due to the extraction of wealth outside of the USA by shipping jobs, technology, manufacturing out of the country for the benefit of a very few at the expense of the many.

I think it's time to admit captalism in it's current form has also failed in the USA.  Or at least the current crony capitalism market that is currently practiced in America.

And we can argue idiologies all day, but until the money is fixed, nothing will change.  If you can create fiat out of thin air and buy all the gold, food, real estate, assets than what is the point of productive work?  Why farm, mine, create energy, build houses or work in the productive sector?  There is no incentize as you will be undercompensated, underpaid.  It is more rewarding to gamble in the stock market or work for a bank.  And this is the biggest problem with capitalism in America.  It's a race to the bottom.  

My 2 cents.






Number 156's picture

Recently in Los Angeles, they had some controversy regarding crime statistics that were cooked to make LA look better than it really did. I think thats how the whole state operates. Bury the mismanagement and get in front of any sucess they dont own and claim the glory. Keep in mind, this is the state that wants to build a train from LA to SF that 7 people will ride a week. They call it the 'Browndogglee' after Jerry Brown:

The high speed rail project is and will be a symbol of California's stupidity and a glittering monument to bureaucratic mismanagement.

So when I see 'No Data" for that state, I know something is up, because if the data was good, they would be screaming it from the mountaintops.


Mr. Universe's picture

SOP for Kalifornia. I was keeping track of the reservoir info from their site this year and now when the run off threatens to overload just about everything, ooops, it's down     Go ahead and see. The state is run by Satanists, lying is their native tongue.

TruxtonSpangler's picture

The decaying tracks of disrepair will be a glorious homage to California idiocy. Beautiful empty tracks as far as the eye can see!

Ex-Oligarch's picture

There is enormous demand for fast transport from Los Angeles to San Francisco.
From Barstow to outer Sacramento, not so much.


SoCalBusted's picture

fake news...  Anyone can post urls that lead to 404s. Why give the other side ammo without doing some basic research.

Mr. Universe's picture

NOT. That link was to the entire data base not a single index. In fact if you do a search it is that site listed . Go ahead and find the data I'm looking for, it aint there.

new game's picture

solution spoiler alert. fifty federal reserves...

DeadFred's picture

Early is the same as wrong. -Wall Street saying

CNONC's picture

I'd say that's vindication.  She failed to guess that a decade of ZIRP would cause yeild seeking investors to buy the muni bonds that propped up state contributions to the pension funds.  The funny thing is, who are many of those yield starved investors?  Those very same pension funds, plus private pension funds and the insurers backing the value of the whole life and annuity policies purchased by many individuals for their own retirement.  There is a vast number of people who believe themselves to be wealthy, or at least well prepared for retirement, who will soon find that their "wealth" was consumed decades ago, and never really existed.

fattail's picture

The Fed has stooped to unforseen depths of criminality and skullduggery.  Timing is always the key, but better to be years early than minutes late.

GUS100CORRINA's picture


This is what happens in a NATION where CORRUPTION is rampant and the Central Banks push ZIRP and NIRP policies for YEARS!

Every single Central Banker should be HUNG from a GALLOWS on the WHITE HOUSE LAWN!!!! Just wait until the MARKET MELTS DOWN.

What a MESS!!! My current view is there is no solution that is mathematically possible. 



MANvsMACHINE's picture

So many so-called bright people can't see the issue. I tell them the collapse is a mathematical certainty. They look at me like I have a penis growing out of my forehead.

bamawatson's picture

"i have a penis growing out of my forehead"

do you remember tom snyder? one night he had a few circus freaks on his show. one at a time he asked each one of them about his/her particular "freakishness'.  when he asked one sad shriveled creature about his pecularity; the guy said "I can lift an anvil with my tongue" snyder paused with perfect professional poise; then said "that would make you very popular in certain circles"

SoCalBusted's picture

Didn't always agree with Tom, but he was good and missed.

bamawatson's picture

((i call foul; only punched "save" once))

well then lets do some moanin joe;   all-night-nancy told me roxy said scarborough was a moaner; sure would like to see trump tweet to Moan'n Joe"

yogibear's picture

The public union's a while back pushed for pension protection via state constitution.

No matter how broke the state is, public unions will push to raise taxes to cover any  pension deficiencies.

It's why they laugh at people warning them.

Lorca's Novena's picture

They wont be laughing when their homes are burned down, along with their $ 300K motor homes living in campgrounds afterwards...  Much like the video of the guy calling out the dindu at wally world for buying steaks with welfare money.

HungryPorkChop's picture

Looks like the Fat Lady has started to sing?  States like Illinois, New Jersey and Maine have front row seat.

drgizmo's picture

You are exactly right ... it like a moral thing ... you never promise what you can not deliver.

Now to put the bow on it ... 10,000 a day will demand payment as they retire ... I would like to see the numbers change as less and less is paid in... and more and more are paid out does seem that it is a devine judgement.

Yes.... this is a predicament not a problem ... problems have some solution ... predicaments must be survived. 

DjangoCat's picture

Who gave the Fed the mandate?  That would be the federal government.  You need to bring them both down, mate.

SilverRoofer's picture

Let the pensions BURN

No Bail outs 

Juggernaut x2's picture

IL is run by, and for the benefit of, public unions-  cops,  firefighters, teachers, AFSCME, etc

Arrest Hillary's picture

"Everyone gets income .... like in Finland !" 

drgizmo's picture

Farmers know there are natural laws that can not be violated ... only mitigated. 

ask your self how long fiat would have value in the following scenario ...

Here is the scenario I envision... 


There are large bushel baskets in front of each retail store in america ...these baskets are filled to the brim with currency ... and there are a group of people in large trucks that make sure the basket never run out of currency ...get it currency of all types available in front of each retail store, grocery store, drug store ... get the picture...available 24/7 and never runs out ....

Now... any one who wants the currency in any amount is allowed to take all they need...or want.  

no limit to the amount ... if you need it you can have have it ... but the Gov sort of asks to take what you Need...sort of an... of honor system not take it if you want it just if you need it. .. ok got it ... that the picture / situation I'm creating...

Now ask your self ...  if this were true as a farmer ...would you take this currency for your crops or products ?  ...yes for a while perhaps ...but ho long? ... see free money destroys markets ...that one thing...

Would anyone work for currency "remember you can all you need in front of every store logically free currency destroys work too.

What would prices for things...could there be prices for things ... so free currency destroys prices too..

conversely ... what would currency be worth ...

how long would this system last ...

see i think you can see infinite currency will never work ...only finite amounts will work ...

for the rank and file ... so the only thing making the system work now is only the 1% gets the benefit of infinite $$$ ...not you /us

...they can not give infinite $$$ to every one would quickly force the value of the $$$  to zero.... but here is the thing ... this is what we now have for the 1%

 so... as that expands ...sooner or later all fiat systems will appear to be the bushel basket system...

This is true for all fiat systems it true for every fiat system on earth... they will all devolve to the bushel basket system...just a matter of time ... and looks time has run out.


A very scary thought ... so if debt is doubling in half the time of the past we are in that exponential cycle close to collapse are we....Remember the story of the lily pads ... the night before the pond is only half full ...