A federal judge gave permission for the city of Stockton, CA to begin bankruptcy proceedings, over the objections of bondholders in the city's pension system. The bondholders believe that Stockton did not negotiate in good faith, preferring the bankruptcy route to the more painful and politically unpopular route of altering the pension system. Reuters: In a case being studied by other cash-strapped American cities including Detroit, U.S. Bankruptcy Court Judge Christopher Klein's decision was a setback for bondholders and insurers who had resisted the California city's bankruptcy filing. Stockton is the largest U.S. city ever to file for bankruptcy.   The judge also signaled that the California Public Employees Retirement System's position in the case was not above review. Stockton, a city of 300,000, has so far not reduced pension payments to retired city workers, although it has eliminated retiree healthcare benefits. "This does not mean there is not...(Read Full Post)