Puerto Rico debt

Oct 5, 17 10:58

Post #1 of 15 (1412 views)

I read that Trump made the following comment in reference to the debt that Puerto Rico is carrying,

"President Donald Trump told Fox News that he was “gonna have to wipe out” Puerto Rico’s debt. “We are going to work something out. We have to look at their whole debt structure,” Trump said. “You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave goodbye to that.”

Does he mean that he is going to erase their debt with a federal government bailout?

I haven't heard any more about it but I find it a little strange.

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 11:04

Post #2 of 15 (1399 views)

Modify the BK law and fist the vulture funds is more likely

Re: Puerto Rico debt [windywave] [ In reply to ]

Oct 5, 17 11:11

Post #3 of 15 (1386 views)

Modify the BK law and fist the vulture funds is more likely

Yes it is more likely. However, I haven't heard a single thing about their debt since the comment so not sure what is going on.

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 11:28

Post #4 of 15 (1366 views)

I don't think Trump meant anything, he opens his mouth and what comes out is as much a surprise to him as a very one else.

But, PR is most likely in the situation where their only possible source is the federal government. They were already a terrible risk. No power, no water means even less economy means no tax revenue.

I can't imagine who would buy a bond backed by them or how they would possibly pay it back.

I'm beginning to think that we are much more fucked than I thought.

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 11:34

Post #5 of 15 (1349 views)

I'm sure it would be a bankruptcy. Trump is not going to pay off the creditors from the fed budget. Next to his own money, the fed budget is next in line to being his, and we know how he hates to give away his money. I don't think he will think twice about that aspect, what is gnawing at him is the federal money he will have to pump in there now to rebuild, that is his money...

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 11:38

Post #6 of 15 (1344 views)

State constitutions and PR say holders of GO obligations get first dips on the tax revenue stream. However, if history is any indication, the pensioners will take a hit and the bondholders will get 25 cents on the dollar.

Wait till IL takes a hit and all the pensioners are crying. You better buy high quality municipal bonds if recent events are any indication or be a big hedge fund that can put up a big legal fight so they can realize some gain.

Re: Puerto Rico debt [summitt] [ In reply to ]

Oct 5, 17 11:44

Post #7 of 15 (1332 views)

summitt wrote:

State constitutions and PR say holders of GO obligations get first dips on the tax revenue stream. However, if history is any indication, the pensioners will take a hit and the bondholders will get 25 cents on the dollar.

Wait till IL takes a hit and all the pensioners are crying. You better buy high quality municipal bonds if recent events are any indication or be a big hedge fund that can put up a big legal fight so they can realize some gain.

US bankruptcy code supercedes, no?

Re: Puerto Rico debt [j p o] [ In reply to ]

Oct 5, 17 11:49

Post #8 of 15 (1316 views)

But, PR is most likely in the situation where their only possible source is the federal government. They were already a terrible risk. No power, no water means even less economy means no tax revenue.

I can't imagine who would buy a bond backed by them or how they would possibly pay it back.

Yeah, that's what interests me. I don't see how, if they were struggling with debt before the hurricane, they will get out of the problems now and what steps the Federal government will take. It sounded to me like he is going to get Wall Street to bite the bullet but I didn't hear anyone on Wall Street agreeing with that.

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 15:09

Post #9 of 15 (1245 views)

I got nothing. Trump isn't much of a fiscal hawk in reality. On the other hand it would be really surprising to see wall street get hosed.

They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 16:18

Post #10 of 15 (1207 views)

If there's one thing Trump has experience in, it's this. There is something in it for him personally if he suggests anything other than outright default. Sort of sounds like that is what he is suggesting in a round-about way.

Re: Puerto Rico debt [Sanuk] [ In reply to ]

Oct 5, 17 19:08

Post #11 of 15 (1147 views)

Sanuk wrote:

I read that Trump made the following comment in reference to the debt that Puerto Rico is carrying,

"President Donald Trump told Fox News that he was “gonna have to wipe out” Puerto Rico’s debt. “We are going to work something out. We have to look at their whole debt structure,” Trump said. “You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave goodbye to that.”

Does he mean that he is going to erase their debt with a federal government bailout?

I haven't heard any more about it but I find it a little strange.

I listened to that interview live and Trump was pretty clear that Wall Street was going to take it on the chin with regards to PR (in his mind at that moment in time). I'm fuzzy on mechanics but he could, hypothetically, issue an executive order somehow allowing Puerto Rico to declare bankruptcy. A Federal Bankruptcy court would then be in the politically awkward position of possibly having to say "no". If someone were advising him and he was listening to the advice, it would be a great move in political chess.

Re: Puerto Rico debt [windywave] [ In reply to ]

Oct 5, 17 19:24

Post #12 of 15 (1139 views)

windywave wrote:

summitt wrote:

State constitutions and PR say holders of GO obligations get first dips on the tax revenue stream. However, if history is any indication, the pensioners will take a hit and the bondholders will get 25 cents on the dollar.

Wait till IL takes a hit and all the pensioners are crying. You better buy high quality municipal bonds if recent events are any indication or be a big hedge fund that can put up a big legal fight so they can realize some gain.

US bankruptcy code supercedes, no?

It's a grey area at the moment. Under the constitution, a state cannot declare bankruptcy but a territory might be able to.

Re: Puerto Rico debt [GreenPlease] [ In reply to ]

Oct 5, 17 19:27

Post #13 of 15 (1135 views)

GreenPlease wrote:

windywave wrote:

summitt wrote:

State constitutions and PR say holders of GO obligations get first dips on the tax revenue stream. However, if history is any indication, the pensioners will take a hit and the bondholders will get 25 cents on the dollar.

Wait till IL takes a hit and all the pensioners are crying. You better buy high quality municipal bonds if recent events are any indication or be a big hedge fund that can put up a big legal fight so they can realize some gain.

US bankruptcy code supercedes, no?

It's a grey area at the moment. Under the constitution, a state cannot declare bankruptcy but a territory might be able to.

I meant their constitutional commitment to pay taxes.

Re: Puerto Rico debt [windywave] [ In reply to ]

Oct 6, 17 13:30

Post #14 of 15 (1050 views)

windywave wrote:

GreenPlease wrote:

windywave wrote:

summitt wrote:

State constitutions and PR say holders of GO obligations get first dips on the tax revenue stream. However, if history is any indication, the pensioners will take a hit and the bondholders will get 25 cents on the dollar.

Wait till IL takes a hit and all the pensioners are crying. You better buy high quality municipal bonds if recent events are any indication or be a big hedge fund that can put up a big legal fight so they can realize some gain.

US bankruptcy code supercedes, no?

It's a grey area at the moment. Under the constitution, a state cannot declare bankruptcy but a territory might be able to.

I meant their constitutional commitment to pay taxes.

It varies by sate and the legal language is not consistent but many states have a constitutional amendment saying full "faith and credit" and then "pledge" their tax revenues to the bondholders. Thus, general obligation bondholders is by the state are suppose to get first dibs on the tax revenue before other creditors. Then there are local state issue bonds, like schools all the way down to revenue bonds issued for highways, airports, etc.

It's a huge industry.

Re: Puerto Rico debt [summitt] [ In reply to ]

Oct 6, 17 14:06

Post #15 of 15 (1030 views)

summitt wrote:

windywave wrote:

GreenPlease wrote:

windywave wrote:

summitt wrote:

State constitutions and PR say holders of GO obligations get first dips on the tax revenue stream. However, if history is any indication, the pensioners will take a hit and the bondholders will get 25 cents on the dollar.

Wait till IL takes a hit and all the pensioners are crying. You better buy high quality municipal bonds if recent events are any indication or be a big hedge fund that can put up a big legal fight so they can realize some gain.

US bankruptcy code supercedes, no?

It's a grey area at the moment. Under the constitution, a state cannot declare bankruptcy but a territory might be able to.

I meant their constitutional commitment to pay taxes.

It varies by sate and the legal language is not consistent but many states have a constitutional amendment saying full "faith and credit" and then "pledge" their tax revenues to the bondholders. Thus, general obligation bondholders is by the state are suppose to get first dibs on the tax revenue before other creditors. Then there are local state issue bonds, like schools all the way down to revenue bonds issued for highways, airports, etc.

It's a huge industry.

Acknowledged since I know that. Now I reiterate, doesn't the US Bankruptcy Code supercede the state constitution?

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