— This is the script of CNBC's news report for China's CCTV on October 24, Thursday.
How broke is broke? That's what a Federal bankruptcy court will decide as it began hearing arguments over Detroit's debt problems - the biggest municipal bankruptcy in US history. The court's ruling is crucial in deciding whether the state can restructure under the Chapter 9 bankruptcy code.
CNBC's Scott Cohn has more:
[Package on tape by CNBC reporter Scott Cohn] Is Detroit really so broke that it needs bankruptcy protection? Or, are city and state officials simply trying to get out of their pension obligations?
Hundred of protestors showed up on day one of the city's bankruptcy trial to argue that that's exactly what's going on. An attorney for the largest employee union says pensioners are being used as scapegoats.
[Soundbyte by Sharon Levine, Attorney, AFSCME] "We are talking about retirees that are making eighteen thousand dollars a year, so we're not talking about, you know, a lot of people with a lot of money to spare."
But an emergency manager appointed by the governor to take over Detroit's finances says bankruptcy really is the only alternative.
[Kevyn Orr, Detroit Emergency Manager]
"It gives us an opportunity to have a structured environment with federal court supervision for comprehensive solutions for some very real problems."
But the issues in the bankruptcy trial are more complicated than that. In order to prevail, the city has to prove that it negotiated in good faith with its creditors. The union says it didn't, and that it truly is insolvent.
The unions say that the bankruptcy filing is unconstitutional. If the city prevails, it could reorganise its finances as soon as next spring, but the benefits will be cut almost immediately. If the unions prevail, recovery, if it ever happens, will take a whole lot longer.
Li Sixuan, from CNBC's Singapore headquarters.