Now What? (I’m Sure It’s Nothing)
Bill Quick

US Commonwealth of Puerto Rico Prepares to Default (in Spanish)

Municipal bond mutual fund investors are panicking this weekend after the U.S. Commonwealth of Puerto Rico’s Legislature passed a new law allowing public agencies to default on their debt.  

Although part of the United States, Puerto Rico in the 1990s made Spanish the official language and now about 86% of the island does not speak English in the home.  Democrat Governor Alejandro Garcia Padilla, who has difficulty speaking English, told Bloomberg News last year that Puerto Rico had a constitutional and moral obligation to not default on the island’s $73 billion of debt.  But he just passed a law giving local court proceedings the power to cancel much all of the island’s bond debt.

Wonder what sort of financial explosion this burning match will set off?  

Posted in Bankruptcy permalink
Bill Quick

About Bill Quick

I am a small-l libertarian. My primary concern is to increase individual liberty as much as possible in the face of statist efforts to restrict it from both the right and the left. If I had to sum up my beliefs as concisely as possible, I would say, "Stay out of my wallet and my bedroom," "your liberty stops at my nose," and "don't tread on me." I will believe that things are taking a turn for the better in America when married gays are able to, and do, maintain large arsenals of automatic weapons, and tax collectors are, and do, not.

Comments

Now What? (I’m Sure It’s Nothing) — 3 Comments

  1. Sure. “Cancel” your debt. That means that the upper 48 have to pay it, right? Hell, why not issue a few trillion, and make everyone on the island a millionaire? We’ll pick up the tab.

    Ball’s in your court, Mr. Obama.

  2. Well, if Puerto Rico can do it, why not the rest of America. I say let’s cancel all the accumulated public debt. But before we do it, let’s issue bonds to cover all the accumulated public employee pension and health care funds, and social security retirement funds.
    We could start with a clean slate.