Puerto Rico planning to default May 2nd

[Knowing]

http://www.bloomberg.com/news/artic...l-default-on-government-development-bank-debt

Governor Alejandro Garcia Padilla invoked a debt moratorium law approved last month, saying during a televised address Sunday that the commonwealth needs to focus on providing essential services. The bank, already operating under an emergency period, had until the end of Monday to make the payment.

“Faced with the inability to meet the demands of our creditors and the needs of our people, I had to make a choice,” Garcia Padilla said during his 10-minute speech. “I decided that essential services for the 3.5 million American citizens in Puerto Rico came first.”

...

The non-payment by the GDB alone will push the amount of outstanding munis in default up by 44 percent, to $23.6 billion from $16.4 billion, according to a tally from Municipal Market Analytics. That would make 0.64 percent of the $3.7 trillion market in default, up from 0.44 percent.

Puerto Rico racked up $70 billion of debt across more than a dozen issuers as it borrowed to paper over budget deficits. Garcia Padilla said 10 months ago that the obligations were unpayable.

Smells like the peso crisis, I wonder what us bank has had 10 months to negotiate their bad bet on to the taxpayer's backs. We'll find out soon enough.

 

[alcoholbob]

They'll be bailed out by the Exchange Stabilization Fund, just like when we bailed out Mexico during the Peso Crisis. The Exchange Stabilization Fund was created when Roosevolt confiscated domestic gold in 1933 and revalued the gold from $20.67 to $35.00. The difference went into the exchange stabilization fund. Nobody knows exactly how much money is in there, but certainly it should be enough to bail out Puerto Rico. That said Mexico actually has productive assets to liquidate, whereas nobody knows if Puerto Rico will just keep chain defaulting like Greece.

 

[overst33r]

They'll be bailed out by the Exchange Stabilization Fund, just like when we bailed out Mexico during the Peso Crisis. The Exchange Stabilization Fund was created when Roosevolt confiscated domestic gold in 1933 and revalued the gold from $20.67 to $35.00. The difference went into the exchange stabilization fund. Nobody knows exactly how much money is in there, but certainly it should be enough to bail out Puerto Rico. That said Mexico actually has productive assets to liquidate, whereas nobody knows if Puerto Rico will just keep chain defaulting like Greece.

I don't understand how you deduced that they will be bailed out by the Exchange Stabilization Fund. In what sense does PR qualify for this?

The ESF can be used to purchase or sell foreign currencies, to hold U.S. foreign exchange and Special Drawing Rights (SDR) assets, and to provide financing to foreign governments.

https://www.treasury.gov/resource-center/international/ESF/Pages/esf-index.aspx

 

[alcoholbob]

I don't understand how you deduced that they will be bailed out by the Exchange Stabilization Fund. In what sense does PR qualify for this?


https://www.treasury.gov/resource-center/international/ESF/Pages/esf-index.aspx

You logic is infallible. It goes like this: "Nobody has ever used bitcoin to fund nuclear research, therefore it can never be used for that function."

The problem with your argument is the premise is not even correct. The exchange stabilzation fund has been used to purchase government bonds directly in the past before, not to mention theres no legal limitation preventing it. The reason that the ESF is likely to be used is because Congress is unlikely to authorize a bailout, just like during the Peso Crisis.

 

[Knowing]

Everyone can rest easy now, Puerto Rico and their creditors will be receiving their money.

http://abcnews.go.com/Politics/wireStory/house-gop-moves-forward-puerto-rico-delays-39219754

The best news, it's definitely not going to come from the taxpayers.

Ryan, R-Wis., said the legislation would avoid an eventual taxpayer bailout.

 

[DrPizza]

If anyone doesn't understand what's going on with PR, John Oliver did a pretty good piece on it to explain how they've been screwed over.

 

[piasabird]

Is there anything in PR worth bailing out?

 

[SMOGZINN]

Is there anything in PR worth bailing out?

3.5 million US Citizens?