So Stockton, CA has officially filed bankruptcy, not sure why they waited this long. The Result of this will, I expect, be a lot more bankruptcy filings. You can also expect a lot more unemployment as cities continue to layoff employees. We may be looking at a new round of foreclosures before long, as the previously safe Government Employee's realize they're no longer safe, and decide they can't afford their homes anymore.
If I were a laid off government employee I'd be pretty damn worried about getting a job anywhere. As someone who was once a hiring manager an ex-government applicant would be pretty low on my list of potential hires.