The ongoing Debt Crisis - at State Level

Meredith Whitney is feeling even more confident about her call on the coming crisis in Muni Bond Market. The States are in deep financial troubles. The apparent cause is economic downturn, but the real cause is unrealistic retirement benefits and huge inefficiencies. It's not clear when the day of reckoning will come, and when it comes what the repercussions might be. Greece is serving as a test model for the debt crisis. Using that model and common sense I can say that,

1. Politicians will try as hard as possible to kick the can down the road. "If the crisis hits when I am gone from office, then I won't be blamed" is how they think. Fixing structural issues is hard. Printing money to create an illusion of prosperity to buy time is easy.
2. Hope springs eternal - which helps us humans survive tough times, but often makes us blind to a future crisis. Americans will continue to be completely sanguine. No one was willing to believe how bad the credit bubble was, and similarly, no one is ready to understand the implications of the debt crisis. Debt at Federal level and debt (including promised future retirement benefits) at State/Municipal level, is simply unsustainable. There is no way to grow out of this.
3. No real solution (like a hard reset via bankruptcy) will ever be attempted unless the market forces it upon us in an unpleasant way. Why ? No one likes to be the bearer of gloom/doom news. No one with vested financial interest (e.g. unionized government workers) would prefer to lose a big chunk of their entitlements, and no politician in his/her right mind would offend the voting blocks. 

This cannot end well.