Fri Jul 1, 2016, 03:29 PM

Puerto Rico makes historic default

Source: CNN

by Heather Long
July 1, 2016: 3:05 PM ET

Puerto Rico just did something that hasn't happened since 1933.

The deeply indebted island defaulted Friday on debt that is supposed to be guaranteed by the Puerto Rican constitution. In other words, Puerto Rico was supposed to pay creditors who hold general obligation bonds before paying anyone else, even police.

But Governor Alejandro García Padilla said: No. He argued that paying teachers, emergency personnel and other critical needs must come first. "This administration continues to take historic steps to ensure the residents of Puerto Rico continue to receive essential services while the commonwealth continues to face a delicate financial situation," a spokesman said Thursday.

The island isn't planning to make any of the $800 million payment to its bondholders due on July 1. Puerto Rico's government says it is in a "dire" financial position with only about $350 million in cash on hand right now.

Puerto Rico's default Friday marks the first time that a state or state-like entity (Puerto Rico is a U.S. territory) has failed to pay general obligation bonds since the Great Depression.

Read more: http://money.cnn.com/2016/07/01/investing/puerto-rico-defaults-general-obligation-bonds/index.html

8 replies, 2062 views

Thread info Bookmark this thread Trash this thread

Reply to this thread

Always highlight: 10 newest replies | Replies posted after I mark a forum

Replies to this discussion thread

8 replies	Author	Time	Post
Puerto Rico makes historic default (Original post)	Night Watchman	Jul 2016	OP
We need clear rules of the road for debt restructuring, just as the UN recommended last year.	forest444	Jul 2016	#1
Puerto Rico is to the USA	seabeckind	Jul 2016	#2
You have no idea what your talking about	angrychair	Jul 2016	#5
Thank you	passiveporcupine	Jul 2016	#6
That's what I said.	seabeckind	Jul 2016	#7
It's almost like we should tax the rich like we used to do.	TeamPooka	Jul 2016	#8
Welcome to the wonderful	penndragon69	Jul 2016	#3
yep - steady as we go...	SoLeftIAmRight	Jul 2016	#4

Response to Night Watchman (Original post)

Fri Jul 1, 2016, 03:36 PM

forest444 (5,902 posts)

1. We need clear rules of the road for debt restructuring, just as the UN recommended last year.

And money laundry vultures like Paul Singer can go to hell (they will anyway).

http://www.democraticunderground.com/10027587144

Reply to this post

Response to Night Watchman (Original post)

Fri Jul 1, 2016, 03:44 PM

seabeckind (1,957 posts)

2. Puerto Rico is to the USA

as Greece is to the EU.

Lessons to be learned.

I wonder how many cities in the USA are in a similar situation?

Over borrow by creative accounting, then refi and roll the new fee into the bill.

It's almost like payday lending on a national scale. Pretty soon the bank owns the state.

We could threaten them but they hold the pink slip on our military hardware.

Reply to this post

Response to seabeckind (Reply #2)

Fri Jul 1, 2016, 05:44 PM

angrychair (7,119 posts)

5. You have no idea what your talking about

I strongly suggest you watch the John Oliver segment on the Porto Rico Debt Crisis. This issue is not because of out of control spending and wastefulness. The people of Porto Rico are victims of predatory lending, the 1% and political incompetence.

Reply to this post

Response to angrychair (Reply #5)

Fri Jul 1, 2016, 06:20 PM

passiveporcupine (8,175 posts)