The public is presumably aware that virtually all western economies are drowning in sovereign debt -- a problem that grows worse as the clock ticks. Nothing going on in Europe or the US (count Japan in there too, though they are not thought of as 'western') changes the dynamic of spiraling out-of-control debt and sluggish, if not collapsing, economies.
States within the US have their own problems. There is no way for California or Illinois to avoid bankruptcy and several other states are right behind them.
But, in all of this, we have forgotten about our cities. Almost without exception, American cities are headed down the road to bankruptcy. Their problems are similar to the problems of the states -- public pension and health care promises that have never been properly funded. We are already seeing policemen and teachers being laid off so that comfortable public employees can retire at twice the national average income or more. Expect more of that until the the schools and public safety concerns shift the debate.
Eventually, these lopsided obligations will drown city financing. The cities will look to the states. The states will look to the federal government. The federal government will look to the Federal Reserve. The Federal Reserve is busy printing money to bail out our national deficit. Soon, the Fed will be asked to print far more money to bail out our states and cities.
Why are we in this situation? Because politicians of both parties have mislead the public about the true cost of the public pension funds and health care programs enacted by state and local government. At the national level, politicians have consistently lied about the funding status of social security and medicare. So, where does this end?
The unwillingness to tell the truth about the funding status of the various entitlements that exist at all levels of government paves the road to Greece. The future can be observed daily on the streets of Athens and Madrid.