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Detroit’s bankruptcy and the problems facing its pension funds offer two important lessons to other communities. One is that state and local governments need to do a much better job managing retirement funds. The other is that they should not pre-emptively reduce hard-earned benefits at the first sign of trouble. Several state and local pension systems around the country are under serious stress. Not surprisingly the hardest hit retirement funds are in places devastated by global economic forces like Detroit, as well as inland cities in California like Stockton, which was battered by the real estate collapse and has also...

Though most Americans go through their day thinking everything is now returning to normal, the fact of the matter is the situation is anything but stable. With crime rates skyrocketing, home prices dropping to under $500 for a house, and the local government out of solutions, the city of Detroit is the latest to join the likes of Stockton, California, having just defaulted on its loans from creditors. Despite promises to the contrary, it should come as no surprise that the city is unable to meet its obligations. And it won’t be the last. City and state governments all over...

Calif. teacher fired for setting up porn sites on work laptop Heidi Kaeslin, 37, was let go from Lincoln High School in Stockton last year for setting up sleazy websites, including mysluttyteacher.com. A California high school teacher has been fired for setting up porn sites — including one called mysluttyteacher.com — on her work laptop. Heidi Kaeslin, 37, was dismissed from Lincoln High School in Stockton last year after her involvement in the seedy project came to light. This week, a panel from the state Office of Administrative Hearings confirmed the ruling — saying files found on the PC were...

Police search for man caught looking into child's room STOCKTON, Calif. (KCRA) —Police in Stockton are trying to identify a man caught on a home-surveillance camera peeking into the window of a child's bedroom early Friday morning. Related. Stockton Officer Joe Silva said a resident heard a noise outside the home, and then spotted the man as he took off on a mountain bike. Police later reviewed home-surveillance video that captured black-and-white images of the man peering into a window of the house for nearly two minutes. At times, the man crawls around on his hands and knees to find...

After a federal judge ruled last week that the city of Stockton can reduce its debt through bankruptcy, observers began to frame the battle as one of municipal bondholders against public employees. But it's hard to shed tears for either of them. During the boom years, Stockton promised its future public-sector retirees free lifetime medical coverage. It also adopted rules allowing workers to spike their pensions by letting them include overtime and other payments from their final work year to calculate retirement pay. Stockton also issued far too many bonds. From 2003 to 2009, on an annual budget of just...

It has been said that an actuary is someone who really wanted to be an accountant but didn't have the personality for it. See who's laughing now. Things are starting to get very interesting, actuarially-speaking. Federal bankruptcy judge Christopher Klein ruled on April 1 that Stockton, Calif., can file for bankruptcy via Chapter 9 (Chapter 11's ugly cousin). The ruling may start the actuarial dominoes falling across the country, because Stockton's predicament stems from financial assumptions that are hardly restricted to one improvident California municipality. Stockton may expose the little-known but biggest lie in global finance: pension funds' expected rate...

This week, while economists should have been closely considering the implications of the actual bankruptcy of Stockton, California, they instead heaped scorn on the perceived ideological bankruptcy of David Stockman. In other words, Stockman trumped Stockton. Ronald Reagan's former Budget Director contributed "Sundown in America" a multi-page opinion piece to the Sunday New York Times which loudly and eloquently described the illusions of our current economic system. While I don't agree with everything Stockman believes, I think he is showing great wisdom and courage in making dire predictions and calling for extreme changes in our policy and politics. What was...

In Stockton, Calif., which has just entered into Chapter 9 bankruptcy, 41 percent of the people do not speak English at home and 21 percent cannot speak it very well, according to the U.S. Census Bureau. Data that the Census Bureau developed on what it calls the “social characteristics” of Stockton during the five-year period from 2007 to 2011, indicate that this city, located eighty miles east of San Francisco in California’s San Joaquin Valley, had a population of 289,926. Of those 289,926 people, 76,869 (or about 27 percent) were foreign born, according to the Census Bureau. Of these foreign-born,...

SACRAMENTO, Calif. (AP) — On its first official day in bankruptcy, the city of Stockton now must grapple with the hard part of reorganizing its financial affairs — how to share the financial burden equitably among creditors while meeting its massive state pension obligations. At the conclusion of a three-day trial, a judge on Monday formally granted the city Chapter 9 protection, over the objections of creditors who questioned whether it was fair for the city to fully meet its obligations to the state pension system while other debt holders go partly paid. The issue — whether federal bankruptcy law...

In late June, Stockton became the nation's largest city to fail financially. At that time, all eyes were on the port city of 300,000 as experts warned the action could set off a string of similar filings among cash-strapped municipalities. Since then, a half-dozen cities have filed for Chapter 9 protection under the U.S. Bankruptcy Code, including the city of San Bernardino.

It is not surprising that they quickly found the source of their pain, the bond holders; those money loving, rich old white guys who know nothing but greed. It is their fault that huge lifelong pensions and free healthcare for life, regardless of how long you worked for the city has not turned Stockton into the utopia it should have been. It is amazing how greedy some people are, they simply don’t care about their fellow man. In a case that will most likely go to the US Supreme Court, the municipal bondholders will be pitted against the California Public...

<p>A few years ago, it was fashionable to compare California, Illinois, or whatever U.S. state was struggling financially to the troubled island nation of Greece. Now, with Stockton, California the largest U.S. municipality to enter bankruptcy, it may be tempting to make another Mediterranean comparison - this time to the troubled island nation of Cyprus.</p>

A mere nine months after we first discussed the inevitability of Stockton, CA.'s bankruptcy, a judge has ordered today that the city will now become the most populous in the US to be declared bankrupt. *STOCKTON CREDITORS DIDN'T NEGOTIATE IN GOOD FAITH, JUDGE SAYS Creditors are pushing to get the city out of bankruptcy but the judge states that "by any measure" the city was insolvent. So, in summary, yeah, it was broke years ago, it still is broke - despite the best efforts by the Central Planning Reserve to reflate the same housing bubble that was the primary reason...

Forbes put Detroit Mayor Dave Bing on its cover in 2011 for a story with the optimistic headline: “City of Hope.” The premise was that the city had hit rock bottom and was poised for a turnaround. “Right now, it’s all about survival,” Bing told Forbes. Two years later, Detroit’s problems continue to multiply, sadly. It is still dealing with high levels of violent crime and unemployment. Home prices, already at historic lows, plummeted a further 35% during the past three years to a median of $40,000 as net migration out of the city continued. The latest blow was Tuesday’s...

STOCKTON (CBS13) – A Stockton man who lived with his girlfriend’s badly decomposed body in a bathtub for several months was convicted of her murder on Wednesday. Devon Omar Epps, 37, was arrested in December 2011 after the apartment manager went to evict him and discovered the body of Veronica Jones in the bathtub of the unit on E. Channel Street. The jury found Epps guilty of all charges: premeditated murder, use of weapon other than a firearm, rape, murder by torture and corporal injury to a spouse or cohabitant. Epps will be back in the San Joaquin County courtroom...

In some towns, visitors are warned to keep an eye on their stuff, or to watch out late at night. In the Californian city of Stockton, the anxiety is more precise – and it kicks in early. "Take care downtown after 5pm," one local person told me. "Don't hang out too long." A few hours later, I saw what she meant. Almost as soon as the offices shut, the city centre empties. Then the sun goes down and a different cast takes to the streets: the homeless, the drug dealers, and clusters of young men patrolling up and down on...

Atwater, a city of roughly 28,000 in California's Central Valley, may declare a fiscal emergency as soon as next week, but it is trying to avoid becoming the fourth California city to file for municipal bankruptcy this year... Since late June, three Golden State cities-Stockton, San Bernardino and Mammoth Lakes-have filed for bankruptcy protection... may have to declare a fiscal emergency" on Oct. 3.

Going to work for the government has always come with an ironclad promise: Your pension benefits will be there when you retire. It's a level of security not found in the private sector, and it's a big reason that government jobs are so prized in Sacramento. Now, however, the city of Stockton's bankruptcy case and the financial problems of other cities are testing whether that promise can be broken. Legal battles over this question loom even though the Legislature just approved an overhaul of public retirement plans throughout California. Lawmakers trimmed billions in pension benefits, but mainly at the expense...

At a California racetrack the souped-up cars that have been revving their way around the circuit stop and fall silent. Their roar is replaced by a deeply soulful rendition of the Star-Spangled Banner as a gigantic American flag is unfurled across the course as part of 4 July celebrations. The race commentator, Wild Wayne, gives a patriotic pep talk emphasising that Independence Day means more than an opportunity to eat hot dogs and sink a few Buds. ... There have been a whole host of books about American decline. There is also a more general malaise, a worry that America,...

LOS ANGELES (KABC) -- The San Bernardino City Council decided to file for Chapter 9 bankruptcy protection Tuesday, making it the second largest city in the nation to ever file for bankruptcy. San Bernardino faces a $46 million budget shortfall and may not be able to pay all its employees over the next three months. Meanwhile, residents don't know what to expect. Two weeks ago Stockton, in Northern California, became the largest city in the country to ever file for bankruptcy. And the tiny town of Mammoth Lakes voted for bankruptcy last week. The city of Los Angeles has serious...