On Tuesday, Stockton California said talks with creditors had failed and prepared to file Chapter 9 bankruptcy. They will be the largest American city ever to do so and the results will be closely watched by other struggling municipalities, public employees, Wall Street, hedge funds, and bondholders alike. If Stockton is able to structure their debt and pension obligations, then other cities will be emboldened to do the same.
Imagine if you will, that you are a retired public employee of Stockton, like John Skaff who requires knee replacement surgery and is being told his retirement medical benefits will be so deeply slashed that he may not be able to afford the surgery. Some say pension benefits were bloated, but there’s a human side of the story here too