"[W]ill the big national bond insurers, who lost the first round when Stockton was ruled eligible for bankruptcy in April, decide the main battle has shifted to Detroit and cut a deal with Stockton, where they have less exposure and a weaker hand? In Detroit, city officials propose cutting the pensions of current workers and retirees. A state judge quickly ruled after the bankruptcy filing that pensions are protected by the state constitution, triggering an appeal that may yield a precedent-setting ruling. In Stockton, city officials do not want to cut pensions, saying they are needed to recruit and retain workers, particularly police. Bond insurers facing major losses under the city's plan argue that pensions should be treated like ordinary debt."  MORE >>