Progress is reported on several questions that bedevil understanding of granular systems: (i) Are the stress equations elliptic, parabolic, or hyperbolic? (ii) How can the often-observed force chains be predicted from a first-principles continuous theory? (iii) How do we relate insight from isostatic systems to general packings? Explicit equations are derived for the stress components in two dimensions including the dependence on the local structure. The equations are shown to be hyperbolic and their general solutions, as well as the Green function, are found. It is shown that the solutions give rise to force chains, and the explicit dependence of the force chains trajectories and magnitudes on the local geometry is predicted. Direct experimental tests of the predictions are proposed. Finally, a framework is proposed to relate the analysis to nonisostatic and more realistic granular assemblies.