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Puerto Rico triggers historic default

Infinite Chaos

Infinite Chaos

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Puerto Rico has triggered the biggest municipal default in US history, risking years of bitter legal warfare with creditors and an austerity "death spiral" with echoes of Greece.
The island Commonwealth finally ran out of money on Monday after a desperate effort to stay afloat, and missed a final deadline for a $58m payment - handing over just $628,000.
~
The Commonwealth is now in legal limbo, facing a well-organised pack of hedge funds that scooped up the debt at distressed levels and appears determined to extract maximum value in the courts, even if this means shutting down part of the island’s education system and social services.

Puerto Rico is not covered by the “Chapter Nine” bankruptcy code in the US, and therefore cannot resort to the sort of orderly debt restructuring that helped the city of Detroit to get back on its feet after defaulting in 2013.
By a quirk of law, it does not enjoy the partial protection of full US states. At the same time, it is unable to draw on support from the International Monetary Fund since it is not a sovereign country.

Link.
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Doesn't look good at all for Puerto Rico, no mechanisms to get them out of the mess and no rescue from any party imminent on the horizon. Would it be cheaper for all Puerto Ricans to just move to the US and close the country / commonwealth state down?
 
Infinite Chaos said:
Doesn't look good at all for Puerto Rico, no mechanisms to get them out of the mess and no rescue from any party imminent on the horizon. Would it be cheaper for all Puerto Ricans to just move to the US and close the country / commonwealth state down?
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I hadn't followed that situation but from afar. What happened? Do you know?
 
Infinite Chaos said:
Doesn't look good at all for Puerto Rico, no mechanisms to get them out of the mess and no rescue from any party imminent on the horizon. Would it be cheaper for all Puerto Ricans to just move to the US and close the country / commonwealth state down?
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No it would be cheaper for them to dump the dollar and adopt their own currency.. after all that is what "people" are advocating for Greece.

The irony is that there is no real mechanism for helping Puerto Rico, but there are plenty for Greece, and yet Greece gets all the attention.. go figure.
 
joG said:
I hadn't followed that situation but from afar. What happened? Do you know?
Click to expand...

Mornin Jog. :2wave: They found out that raising taxes didn't solve the problem.



Puerto Rico Has Defaulted.....

Puerto Rico's Government Development Bank paid only $628,000 of the $58 million due creditors, the agency said. It said the decision "reflects the serious concerns about the Commonwealth's liquidity" and the need to ensure "essential services (residents) deserve are maintained."

Given the tiny payout, "Moody's views this event as a default," said Emily Raimes, vice president at the U.S. credit giant.

Puerto Rico's outstanding debt of $72 billion is far bigger than Detroit's $20 billion bankruptcy two years ago but a fraction of Greece's $350 billion in obligations. But unlike Detroit, there's no law allowing Puerto Rico to declare bankruptcy. And Treasury Secretary Jack Lew has said the federal government won't bail out the island, as institutions such as the International Monetary Fund rescued Greece......snip~

Puerto Rico Has Defaulted - Christine Rousselle
 
joG said:
I hadn't followed that situation but from afar. What happened? Do you know?
Click to expand...

They are getting the same results as everyone else who thought Socialism is a good idea. What happened? As always, the OPM ran out.
 
MMC said:
Mornin Jog. :2wave: They found out that raising taxes didn't solve the problem.



Puerto Rico Has Defaulted.....

Puerto Rico's Government Development Bank paid only $628,000 of the $58 million due creditors, the agency said. It said the decision "reflects the serious concerns about the Commonwealth's liquidity" and the need to ensure "essential services (residents) deserve are maintained."

Given the tiny payout, "Moody's views this event as a default," said Emily Raimes, vice president at the U.S. credit giant.

Puerto Rico's outstanding debt of $72 billion is far bigger than Detroit's $20 billion bankruptcy two years ago but a fraction of Greece's $350 billion in obligations. But unlike Detroit, there's no law allowing Puerto Rico to declare bankruptcy. And Treasury Secretary Jack Lew has said the federal government won't bail out the island, as institutions such as the International Monetary Fund rescued Greece......snip~

Puerto Rico Has Defaulted - Christine Rousselle
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Usually, and this is the bad news, raising taxes will accelerate the downward spiral. But there is good news after the dead cat bounce. It falls no further.
What is disturbing is that everyone knows these things and governments overspend nonetheless.
 
natsb said:
They are getting the same results as everyone else who thought Socialism is a good idea. What happened? As always, the OPM ran out.
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That about sums it up.
 
joG said:
Usually, and this is the bad news, raising taxes will accelerate the downward spiral. But there is good news after the dead cat bounce. It falls no further.
What is disturbing is that everyone knows these things and governments overspend nonetheless.
Click to expand...

Well they will have to think of something. It is a US territory.
 
MMC said:
Well they will have to think of something. It is a US territory.
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We will have to bite a bullet and help out jump start the economy after default and a haircut of close to 100 percent.

But only if they are willing to mend the structure of their governance to stop overspending.
 
What's wrong with this picture?

Infinite Chaos said:
The Commonwealth is now in legal limbo, facing a well-organised pack of hedge funds that scooped up the debt at distressed levels and appears determined to extract maximum value in the courts, even if this means shutting down part of the island’s education system and social services.
Click to expand...
 
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