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A motor city has gone flat.
Detroit Michigan the town that gave birth to the nation's auto industry wants -- -- of the American economy.
Is now the largest city in American history to go.
-- -- what -- -- -- -- is to see there are welcome everybody I'm Bill Hemmer live in New York City on a Friday and Martha hello to London and hello to you.
-- -- their -- good morning I'm Martha McCallum live in London so Detroit is now sixteen billion dollars and that.
They've got rampant mismanagement a shrinking population there and the governor Rick Snyder approve this plan he insists.
That there really is just no other way.
No this is there were no other viable options and I view this is an opportunity to say let's stop the decline.
This is a situation that's been and the period of decline of sixty years in Detroit.
And it's resulted in eighteen billion dollars of doubt that the city can't afford a penny and more importantly -- its -- and services that.
Are not good nor appropriate for the wonderful people of Detroit -- a statement this is Stewart.
-- now anchor Barney company Fox Business that -- good morning Stuart Little.
Who takes the hit now 20000.
Retired city will -- -- -- will ultimately take a very big -- that checks will continue for now for the foreseeable future.
But it -- within a reasonable period of time they would take a massive hit the road nine billion then all gonna get it.
And creditors the people who -- Detroit money up to a 100000 people.
Then -- gonna get their money back maybe ten cents on the dollar -- nearly ten billion dollars for those who have money and only get -- -- portion of that is really remarkable when you only get a part.
Of that back Detroit is one city.
Does this go elsewhere it very probably will because all those cities -- -- on the same financial precarious position will look at Detroit's insight.
-- you've got the escape -- Our problem is city pensions we can't pay him.
If we go the Detroit route and declare bankruptcy may -- we can get a handle it so all the cities all likely to follow suit brought take us back five years I mean 20082009.
In the auto bailout.
Yet it may have helped the unions -- may have helped the car companies.
Did it do anything for the city of Detroit in the -- apparently not not the city of Detroit and the question now is bill.
Will President Obama stepped in with another bailout for the unions it is unions who -- -- Nine point two billion dollars in these retiree pensions Willie stepped in with a bailout that would I don't know the answer and I guess for you think that's possible.
It is possible the president says the White House says they -- monitoring the situation they are concerned about this about Iraq is not out of the question what do you think is the lesson here Stewart as -- watch this unfold you count tax to the Max you cannot set up a cradle to grave welfare system and you cannot tell you lavish pensions if your economy does not to grow.
Detroit -- trunk what have a you cannot pay those pensions.
You got to remember time too and all these deals came together 1950s and sixties industry with -- and it's been anything but since.
Stewart check yet at 920 -- kidnapping -- -- boarding there on that as we mentioned part of Detroit's financial problems can be attributed to a shrinking populations -- entire neighborhoods practically empty.
Population now hovers around 700000.
A level that city is not seen since the year 1910.
A hundred in three years ago down from a high of nearly two million people decades ago -- And union roots in Detroit are deep in -- contributed to the city's financial challenges.
Right now Detroit has 48 employee unions the city's long term liabilities including underfunded pensions.
Are more than fourteen billion dollars in the hole.
-- -- long -- projected cost of health care for city retirees has ballooned to around seven Billy again.
Dollars Stuart mentioned this to Martha bankruptcies like Detroit are rare but they are on the increase.
53 cities towns counties or villages have filed for chapter nine bankruptcy going back to 1980.
28% of those have been filed since the year 2008.
Stockton California held the distinction.
Of the largest US city to file for bankruptcy that was before Detroit of course.
Stockton filed in June of 2012.
Million dollars in debt.
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