Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’
Source: New York Times
Puerto Ricos governor, saying he needs to pull the island out of a death spiral, has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.
The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the islands creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.
The debt is not payable, Mr. García Padilla said. There is no other option. I would love to have an easier option. This is not politics, this is math.
It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state.
Read more: http://www.nytimes.com/2015/06/29/business/dealbook/puerto-ricos-governor-says-islands-debts-are-not-payable.html
Puerto Rico Has No Easy Path Out of Debt Crisis
AngryAmish
(25,704 posts)A sovereign nation can pay bills in their own currency.
ToxMarz
(2,166 posts)I wonder if anyone has told Puerto Rico yet.
Adrahil
(13,340 posts)Also, they have held a number of referrenda on their status. In the most recent one, a large majority voted to maintain current status, or to become a state.
AngryAmish
(25,704 posts)For a brief moment I made a living as an economist. Back then my employer had me look at the fundamentals of the Puerto Rican municipal bonds among other things.
Gadzooks. Honestly, the PR government had no idea what they were buying. It has only got worse in the 20 something years since. I have sometimes followed this out of morbid fascination.
But if the US government is benevolent there is a way out. The US and PR connection is a creature of treaty. And treaties can be changed. Change it to grant PR full iindependence, make all bondholders jurisdiction to litigate San Juan municipal court and all bonds payable in Puerto Rican dollars.
Please, let us help out Puerto Rican brothetd and sisters.
Adrahil
(13,340 posts)... but is independence the way to do it, ESPECIALLY since the vast majority of people in PR DON'T WANT IT?
Also, what would happen to privately held PR accounts? Would they all be converted to PR dollars, which would become almost instantly worthless due to devaluation because of PR printing money to pay now "foreign" debts. Also, the U.S. government does not have the authority to simply change the Treaty of Paris. Spain would also have to be involved, and I would think the PR people might actually want a say in that process!
iandhr
(6,852 posts)jtuck004
(15,882 posts)Hoppy
(3,595 posts)I was planning a vacation until I read, Don't stop for traffic lights after sundow. Carjackers wait at traffic lights for victims.
It's an unwritten rule but it's true.
NickB79
(19,243 posts)My grandmother-in-law lives in a suburb of San Juan a couple miles from the ocean, and between what you can catch from the ocean and what you can grow on even a quarter acre of backyard land, you could go months without setting foot in a grocery store.
FYI, big meaty iguanas are plentiful, considered a pest, are tasty grilled, and very, very stupid.
dixiegrrrrl
(60,010 posts)Just like Lehman and AIG had "wide reaching repercussions".
First Greece, now this....
All the counter parties to this unpayable debt are gonna be part of the financial snowball to come.
'A broad restructuring by Puerto Rico sets the stage for an unprecedented test of the United States municipal bond market, which cities and states rely on to pay for their most basic needs, like road construction and public hospitals'. -
bigworld
(1,807 posts)where did all that money go?
Igel
(35,309 posts)It was used to pay salaries. It was used to buy materials and pay wages for contruction projects, "investments". To pay for vehicles, government and public transportation.
It was used to pay pensions.
To pay for electricity infrastructure, but electricity rates weren't high enough for paying back the debt--or they let a lot of customers consume without paying for what they consumed.
Some, no doubt, was lost to corruption of one kind or another.
Just as in Greece, receipt was taken, and it was used. At times corruptly; at times for political ends.
It's good the US budget deficit for this fiscal year will be under $500 billion. (With inflation, it'll be just a bit higher than the pre-stimulus spending for the last full year Bush II was in office.) Tht gives the US room to borrow to bail out PR, because you know it's going to happen.
dixiegrrrrl
(60,010 posts)Gloria
(17,663 posts)I could never find the exact bond info for what we had owned, but I found a similar issue and based my decision to get out then...back maybe 5 years ago...
Submariner
(12,504 posts)a decade ago, and he said 140 FBI agents were stationed on the island. I asked if the drug running problems were that bad requiring so many agents. He said only 30 agents were assigned for the drug interdiction program, but the other 110 were to investigate government corruption due to the theft of Federal funds allotted to the island.
Gloria
(17,663 posts)A few years ago, we were in some Puerto Rico Electric Authority paper courtesy Edward Jones.
Doing my research as things in general started going crazy (all that QE, worries about bonds) I got out of them.
There were issues of the fluctuations in oil prices, of course, but it was the larger picture in PR. that was also a factor.
Sancho
(9,070 posts)More than 100 people per day have left Puerto Rico on average in the past few years. Florida ranks as their top destination, instead of the once-more-popular New York, studies of U.S. census data show.
Many leaving are entrepreneurs and professionals ages 20 through 50, who are setting up businesses and bringing their bilingual skills to the Sunshine State.
Judi Lynn
(160,530 posts)for certain.
Truly appreciate your link and comments.
eppur_se_muova
(36,262 posts)freshwest
(53,661 posts)Judi Lynn
(160,530 posts)stuffmatters
(2,574 posts)Really appreciate your information. I think we can start figuring most of these deficit crises are due to low or no taxes on the rich & corporations coupled with Wall Street predatory public bonds/loans.
Ghost Dog
(16,881 posts)Starry Messenger
(32,342 posts)Response to Bosonic (Original post)
stuffmatters This message was self-deleted by its author.
Historic NY
(37,449 posts)The tax haven saves the rich but doesn't fill the coffers.
http://www.forbes.com/sites/laurengensler/2015/02/11/puerto-rico-new-age-tax-haven/