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Puerto Rico just defaulted for the first time


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Patrick Gillespie



The commonwealth paid a mere $628,000 toward a $58 million debt bill due Monday to creditors of its Public Finance Corporation. This will hurt the island's residents, not Wall Street. The debt is mostly owned by ordinary Puerto Ricans through credit unions.


"This was a decision that reflects the serious concerns about the Commonwealth's liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico," Puerto Rico's Government Development Bank president Melba Acosta Febo said in a statement.


The default is a historic moment in Puerto Rico's economic "death spiral," a term the island's governor, Alejandro Garcia Padilla, has used. The island is struggling with about $70 billion in total outstanding debt, and its economy is in recession.


Padilla has put together a team to come up with a plan to restructure Puerto Rico's debt crisis by the end of the summer.



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  • 7 months later...

March 15, 2016 By Fausta

Rachel Greszler writes about Obama’s Disastrous Plan for Puerto Rico (emphasis added)

Some have suggested granting the island retroactive access to Chapter 9 bankruptcy. This would leave some creditors out of luck (investment promises to the contrary) and would address only about 30 percent of the commonwealth debt. Even if all creditors were thrown to the wolves, ordinary Chapter 9 bankruptcy could only reduce the island’s total debt to about $50 billion. Tack on the unfunded pension obligations and total commonwealth debt would stand at $94 billion, well above the “unpayable” mark of $72 billion.


Presumably, that’s why the administration wants to throw creditors under the bus — because if it doesn’t, Puerto Rican pensions will have to take a hit too. Scissors-32x32.png


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  • 5 years later...

Yes, the US Government Has Defaulted Before

1 HOUR AGO Ryan McMaken

The regime is trying to whip up maximum hysteria or the chances that the US government could default on its debts if the debt ceiling is not raised.

So far, the financial markets don’t seem to care that much, as ten-year Treasurys over the past week have barely risen above 1.5 percent, and not even matched last March’s high. Investors seem pretty confident that the world will continue even after default.

But the media and Democratic politicians assure us that any default will bring about a second Great Depression and financial collapse.

One key component of this strategy is convincing people that the United States has never defaulted before, and has always made good on its financial obligations. This is key because it helps create the impression that were the United States to default, the result would a step into the great unknown, and a “financial crisis and a calamity.”    :snip: 


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