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Governor of Puerto Rico: "the island cannot pay back $70 billion in debt"

Old_JoeOld_Joe
edited June 2015 in Off-Topic
"The governor of Puerto Rico said in a televised address Monday that the island cannot pay back more than $70 billion in debt, setting up an unprecedented financial crisis that could rock the municipal bond market and lead to higher borrowing costs for governments across the United States.

“This is not about politics,” said Puerto Rico’s governor, Alejandro Garcia Padilla. “It’s about math.”

Bankruptcy is not an option: Link to Washington Post article

Comments

  • scott
    edited June 2015
    "“This is not about politics,” said Puerto Rico’s governor, Alejandro Garcia Padilla. “It’s about math.”

    image

    I don't disagree with him. That said, they won't be bailed out unless it becomes so bad that they have to and if that's the case, it opens the doors for others. This and Greece will be a test of how far countries will go to bail out to maintain the status quo.

    See also: http://market-ticker.org/akcs-www?post=230279
  • Old_JoeOld_Joe
    I was chuckling as I posted that, thinking of what you'd have to say. You didn't disappoint! :)
  • scott
    edited June 2015
    Old_Joe said:

    I was chuckling as I posted that, thinking of what you'd have to say. You didn't disappoint! :)

    Well, I mean it is what it is. Throwing money at Greece doesn't solve Greece. We'll be having the same conversation in 6-12 mo. If the first bailout a couple of years ago fixed Greece/created a sustainable plan for the country going forward we wouldn't be having this conversation.

    Bailing out Puerto Rico doesn't fix PR, either. It's not political. It's simply that the debt level is not sustainable.

    These are broken situations and piling on more money to owe isn't the answer. Borrowing from the future because you don't like today's reality isn't sustainable.

    The whole thing ends pretty badly but as I said in the other thread, if they kick the can again on Greece it'll show that they have no desire to face reality and will do whatever it takes to keep the status quo going.
  • Old_JoeOld_Joe
    edited June 2015
    Oh, I definitely agree with you... just chuckling because I knew that you couldn't resist jumping on this additional financial fiasco.
  • JohnChisum
    So is this good or bad for Gundlach and Doubleline? Gundlach had been buying PR debt earlier.
  • catch22catch22
    Hi @JohnChisum

    Mr. G was just saying............

    http://www.businessinsider.com/r-doublelines-gundlach-says-purchased-lots-of-treasuries-ginnie-maes-on-friday-2015-6
  • JohnChisum
    Well what do you know. I am interested in his buying of Ginnie Maes. I had a position in a GNMA fund for years until a year or so ago. Once rates normalize I plan on going back in if they look good.

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