http://www.statesmanjournal.com/article/20091101/GAMBLE/311010001/1001 i thought california’s was the only pension plan wild-west enough to lever up to the market in an attempt to bridge the pension obligation gap. here is our reason why the stock market has shot up 60% and why it hasn’t dropped as of yet. it also tells us why the bond market continues to signal a massive equity selloff, should it prevail as the true indicator of economic health (which it always has). this is just scary. we could see pensions being underfunded by 50-80% if they all have to unwind their equity positions. do they have no CFAs or even any educated risk managers on staff who should know that you don’t lever up when you’re down? this is what makes me fear a 90% drop in the market over a month. this is what makes me fear unemployment of 40%. imagine all california pension benifits stopped. thats a lot of ongoing cash flow coming to a halt.
personal opinions don’t count 
I have often wondered if a big reason why the Government decided to bail out bank bondholders at the expense of taxpayers was because large pensions are heavily exposed to bank fixed income, and the government didn’t want to be blamed for the fact that pensions were becoming massively underfunded. Now this just looks like the next phase of that problem. Social security already looks like toast; now the “private” system looks mighty toasty too.
OP, you a subscriber to Robert Prechter? If so, don’t. Snake oil.
i think the world economy is going to have to adjust itself to work on a rolling 10-year time-line; only creating obligations at the beginning of that timeline and actually meeting those obligations, all the while, denying any union involvement outside of year 10 and year 1. imagine that, 8 years of non-union friction every 10 years. wouldn’t it be nice if we were older…