It seems to me that Maggie Thatcher's comment that 'the trouble with socialism is that sooner or later you run out of other people's money' is coming true before our eyes.
Arnold Schwartzenegger's economic advisor David Crane writes in the LA Times "Today's unfunded liability is next year's budget cut to important programs."
California sits on a $500 billion pension liability with huge political consequences and, beyond those, fundamental challenges to the viability of the state of California. The mess is worse because California has done what we could imagine every government is doing, hiding the truth of its financial situation so as not to have to take the unpopular steps of actually dealing with it.
Don't think this is just California's problem. From sovereign countries (Iceland, Greece) to average little counties (eg Jefferson in Alabama) and municipalities the schemes of easy money and complex financing are unraveling.
Whether the pipers that lent the money are actually paid or not is an interesting new theme. Iceland won't pay what it owes, China has declared many of its debts inoperative because of the unregulated derivatives behind them and Greece is mulling over its options. So the all-powerful Goldman Sachs of the world are suddenly dependent on government money, the printing of which makes everyone poorer so that GS can be made whole.
When your local firehall closes, and your child's teacher loses her job, and your father-in-law's pension check stops coming, and your income tax refund does not reach you, you may feel a bit grumpy watching your tax money go to bailing out a well-connected financial institution that pays billions in bonuses to the managers that sold all this unmanageable debt in the first place.
This is the reality of US politics: the system is not sustainable and the powers behind it are trying to keep themselves whole financially with other people's money. Depriving individuals of their entitlements creates front page stories of misery with a very short individual half-life but with daily examples. In the back pages and the business sections there are vague allusions to keeping the banking system afloat because it is the lifeblood of the day to day economy, and "too big to fail" has implications for whether there will be food on the grocery store shelves in your neighborhood next week.
What a mess. I still think that restoring the system to some form of balance will bring discomfort and misery on the scale of the 1930s.
Live within your means, and expect to be taxed beyond them.