FANNIE MAE AND FREDDIE MAC: “Note that, even if Fannie and Freddie obtain an exemption from new accounting standards, that doesn’t make them adequately capitalized. That just allows them to continue to pretend that they are.”

Meanwhile, look at public pension funds.

UPDATE: Reader David Reedy emails:

I’m a professional retirement actuary (a “Fellow of the Society of Actuaries”) and I gotta say you are 100% correct to shine a spotlight on public retirement plans. The system is a horrible mess and taxpayers (as usual) are the ones being hurt.

If I can add a comment to what you wrote, the issue is not just “pension plans.” There are all kinds of post-employment benefits — pensions are only part of the picture. (For example, there are severance plans that pay a bonus or temporary annuity at retirement. And there are post-employment medical benefits — the value of these promises can be a lot larger than the value of pension promises.)

Many of the non-pension benefits have even less funding than public pensions, or no funding at all.

It should be illegal for politicians to promise post-employment benefits without putting aside reasonable funds to pay for the promise. Alas, that isn’t the case.

Yes, and the press tends to undercover these things because of its sense that only capitalists can be guilty of accounting flimflammery. My sense, though, is that for all the problems in the private sector, things in the public sector are much worse.