https://www.youtube.com/watch?v=OfzCJoJ8NA4
Puerto Rico has filed bankruptcy:
As per our report last night that following the expiration of the litigation freeze, Puerto Rico’s creditors had filed a barrage of lawsuits against the insolvent Commonwealth a bankruptcy was imminent, moments ago Puerto Rico’s governor announced the commonwealth will request bankruptcy protection of a portion of the island’s $70 billion in debt, setting up a showdown with Wall Street firms owed billions of dollars, in what will be the largest-ever U.S. municipal debt restructuring and further complicating the U.S. territory’s efforts to pull itself out of a financial crisis.
The Puerto Rico restructuring would be far larger than Detroit’s record-setting bankruptcy, with little to no details how long a court proceeding would last or what cuts would are imposed on bondholders. The island’s financial recovery plan covers less than a quarter of the debt payments due over the next decade.
Cited by AP, Gov. Ricardo Rossello said Wednesday that a federal control board overseeing the island’s finances has agreed with his request to put the debts before a court. He told reporters that he has requested that the U.S. territory’s federal financial oversight board commence a Title III proceeding under last year’s Puerto Rico rescue law known as PROMESA. Title III is an in-court debt restructuring process similar to U.S. Bankruptcy.
Go here to read the rest. For years I have been saying that we are heading for some form of debt repudiation. Don’t think for a moment that States with debts that they can never pay short of Weimar Germany hyperinflation are not looking longingly at what Puerto Rico is doing. Eventually Congress will allow States to file bankruptcy and the floodgates will open.
https://www.youtube.com/watch?v=Qy6wo2wpT2k
My understanding is that PR does not have access to US bankruptcy laws.
In any case, Puerto Rico cannot pay according to the terms. Ergo, investors will calculate the recoverable amounts using reasonable estimates of the amounts believed to be recoverable over a reasonably estimated time frame, and discounting those cash flows at the stated rate of the bond indentures. The calculated/estimated deficiency would be charged as a loss.
Similar fiscal catastrophes are brewing in most so-called blue states. Also, many pensioners will face tragic reductions.
This is what happens when the SJW’s run out of other people’s money. They can’t repay them.
It will be interesting to see if Uncle Sam bails out pension fund and Wall Street investors in Puerto Rico defaulted paper.
Isn’t that why they pay people like Hillary $250,000 and Obama $400,000 for 20-minute schmoozes?
“My understanding is that PR does not have access to US bankruptcy laws.”
Incorrect. Congress changed the law last year to allow Puerto Rico to file bankruptcy.
You know this is coming to “your” blue state imminently.
Here in the mentally-ill state of California, the actual market basis allocated debt per household for the state’s ballooning pension debt is about $75,000 each: $1 trillion total. and the state actually pretends to run a surplus but is not.
http://www.pensiontracker.org/
Even that hardly right-wing org, Stanford Institute of Public Policy issued a warning in December (2016) of the unsustainability of just the pension debt load on the state’s budget.
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But nobody pays attention.
Thanks, Donald, I retired from this pomp and circumstances end of May 2015. My accounting answer wasn’t 100%, either. The discount rate would be the effective rate (related to the purchase price) at which the debt security was acquired.
The pension funds’ yield estimates often are too high (high risk, high yield). It’s one way they can estimate they are “solvent.” Estimation approaches have been made to be complicated which allow the numbers to be manipulated.
Anyhow, government without justice is mass brigandage – St. Augustine. Government is the middle man in the robbing of Peter to pay Paul. It’s a code word for the crimes we agree to commit in unity.
Interesting that the State of Californication is cited in the comments above. Apparently they have been as foolhardy with their finances as they have with their power generation. Rancho Seco was shutdown in the 90s. San Onofre is now gone. And Diablo Canyon is next. No nukes Californicators! And they want useless worthless green energy wind mills that don’t turn when you need them to and solar cells that don’t produce on cloudy days or at night time. and they won’t allow any coal or gas or oil generation – dreaded carbon emissions! I say let the Californicators suffer and wallow in the mess and filth that they have created. Sanctuary cities, open sodomy, rampant baby murdering. Let them reap the punishment they have brought on their own heads. For the righteous in Californication, I have one phrase – MOVE OUT! FLEE! Do as Lot did regarding Sodom and Gomorrah! For the rest I have nothing but disgust.
Agree, Lucius Magnificus, regarding exit-strategy from Californicate-ya and the SF Baytheist Area.
Our planning strategy is in place in 3 years 4 mos for NE Utah, and the clear free air and where open-carry prevails and a men’s restroom means men only.
But a small perverse fascination I will have to forego is to watch the daily CA madness and the certain coming train wreck.
What about those of us at that awkward age (50 something) where you’re probably too old for a new employer to hire but still at least 10-15 years away from retirement? Is there any good exit strategy for us?
I would recommend for such a person Elaine seeking employment in small town businesses. Often times they have difficulty getting young employees and they often have more appreciation for an experienced worker than urban employers. This applies both to the private and public sectors in rural areas, at least in Central Illinois in my experience. In my county experienced secretaries, especially those with computer skills, often are in high demand.
How ’bout we agree to a federal bailout of bankrupt states IF those states agree to revert to territorial status?
A lot of liberal Congress Critters would suddenly find themselves neutered.
What about those of us at that awkward age (50 something) where you’re probably too old for a new employer to hire but still at least 10-15 years away from retirement? Is there any good exit strategy for us?
The state college in Springfield, or one of the other state campuses. They generally have TIAA-CREF, which is distinct from state and local pension systems. With your background, you might be a good fit for the communications office.
Art, by “exit strategy” I meant getting out of IL altogether so getting a job at a state university isn’t going to help. All IL state universities are on the State Universities Retirement System (SURS) which is part of the same astronomical pension liability as the State Employees Retirement System (SERS) and the Teachers Retirement System (TRS).
I’m quite surprised TIAA-CREF is not covering your state schools. You could apply to a private institution. St. Louis University and Washington University in St. Louis come to mind. If you’re inclined toward small cities, there’s a clutch of them in Indiana and Iowa and Wisconsin. Your mobility is going to depend on your husband’s occupation. While we’re at it, Wisconsin’s state pensions are fully funded.
That Congress finally acted in this matter is fortunate for Puerto Rico’s creditors, else they would not have access to US bankruptcy laws but only to whatever the Commonwealth of Puerto Rico imposed on them.
Don’t get too smug thinking about California’s state debt and unfunded pension liabilities, Lucias, Elaine, et. al.. Your own state’s may be worse. Illinois, for example. Or not much better. Utah, for example, has about half of what California has. Yet half of unmanageable is still unmanageable.
Illinois will eventually be the first state to go into bankruptcy.
I don’t think that is correct. The US Constitution runs in Puerto Rico so they simply could not declare debts null and void, and the Commonwealth could always be sued in Federal Court.
Yet half of unmanageable is still unmanageable.
No, state debts are manageable. Even during the Depression, only 3 states were in default. What’s of concern is unfunded liabilities. Some states have actuarially sound retirement systems, some do not.
Puerto Rico has some long-standing problems in its social and political economy, as well as more recent economic woes (a decade-long recession, for starters). It’s not terribly representative.
In 2015, Wall St Journal did a good analysis of the states with worst unfunded pension liabilities: At that time, those red states like S Dakota (#1 most well funded) , Nebraska (#12 most well funded) and others, like Utah (#14) etc did pretty well:
https://graphics.wsj.com/table/Connecticut_102015
It is a nice graphic and snapshot of the future Puerto Rico’s among us. CA at that time was #21, but Stanford Institute for Public Policy now puts them near the bottom (report Dec 2016), with the $1 Trillion unfunded dollars I mentioned above.
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And who was dead last? Illinois, #50. Land of Barry O.
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However, you all may be familiar in June of 2016, George Mason U. ranked all the states again in terms of total debt—accumulated debt as well as annual IOU’s and other notes payable.
https://www.mercatus.org/statefiscalrankings
Again, nice and neat, but Illinois actually has other blue-blue-state company: Connecticut, New Jersey, and Massachusetts. You can click on each of the 50 states (or 57 if you are Barry from Down Low Chi-town) and get the real numbers.
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Yes, Utah looks pretty good compared with Californicatia.