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  1. #1
    Senior Member JohnDoe2's Avatar
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    Millions of American Retirees at Risk if Puerto Rico Defaults on Debts

    Millions of American Retirees at Risk if Puerto Rico Defaults on Debts

    By Adam Shapiro
    Published June 29, 2015 FOXBusiness

    (Reuters)

    The municipal bond market is anxiously waiting to hear how Puerto Rico’s Governor Alejandro Garcia Padilla plans to pay back billions of dollars in public debt. Padilla has already said, “the debt is not payable” and at 5 p.m. ET on Monday he will address the commonwealth’s 3.6 million citizens

    Between June 30th and July 3rd, Puerto Rico has to make close to $2 billion dollars in payments on its debt. But making those payments will leave the region essentially broke and unable to cover day-to-day expenses or make future debt payments as early as mid-July. Joseph Rosenblum, director of municipal credit research at Alliance Bernstein expects the 5pm speech to be light on details, “there will be more generalities than specifics and then we enter the phase where hard negotiations begin.”


    Puerto Rico has sought help from the US government. Its constitution requires it to pay back lenders and as a US territory it is prohibited from restructuring debt through bankruptcy the way the city of Detroit did last year. Rosenblum expects the speech to rattle the US municipal bond market, “we certainly saw Puerto Rico bonds take a hit this morning. I would expect there will be some impact on the market as a whole in the form of higher borrowing costs. Spreads might widen but I think it ought to be short term.” Rosenblum expects investors may be able to find opportunities as the market digests the news from Puerto Rico.


    But the news may be harder to swallow for millions of American investors who are unaware their future is tied to Puerto Rico’s debt. Fund giant Morningstar says half of all US municipal mutual funds hold debt from Puerto Rico. That’s down from the 77% that held Puerto Rican debt in 2013. Millions of American retirees are invested in those muni bond funds which had been considered the least risky and safest of investments.


    Rosenblum says, “it doesn’t matter what kind of fund it is you could have Puerto Rico exposure.” In some cases that debt may be uninsured leaving the muni bond funds and their investors on the hook as Puerto Rico forces a restructuring.

    http://www.foxbusiness.com/markets/2...ults-on-debts/

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  2. #2
    Senior Member JohnDoe2's Avatar
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  3. #3
    Senior Member JohnDoe2's Avatar
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    Senior Member JohnDoe2's Avatar
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    White House: No federal bailout for Puerto Rico

    By JOSH LEDERMAN
    Associated Press

    WASHINGTON (AP) - The White House threw cold water Monday on the notion of bailing out Puerto Rico from its financial crisis, instead urging Congress to consider changing the law so the island can declare bankruptcy.

    On the heels of a dismal economic report, Puerto Rico's governor has warned that the commonwealth can't pay its $72 billion public debt, delivering a serious blow to Puerto Rico's recession-addled economy. But White House spokesman Josh Earnest said the federal government would provide financial expertise and access to existing resources - but not a bailout.


    "There's no one in the administration or in D.C. that's contemplating a federal bailout of Puerto Rico," Earnest said.

    "But we do remain committed to working with Puerto Rico and their leaders as they address the serious challenges."


    Earnest said the Treasury Department is working with Puerto Rican officials to offer advice, and that an interagency task force would help the island identify federal programs and funds it might be able to tap into. He described that assistance as similar to what the federal government offered Detroit during its crisis. The Obama administration declined to offer Detroit a bailout, and the city declared bankruptcy under Chapter 9 of the Bankruptcy Code in 2013.


    As a U.S. territory, Puerto Rico can't file for bankruptcy under that chapter, which is limited to municipalities such as Detroit.

    But Puerto Rican Gov. Alejandro Garcia Padilla has said he's considering asking Congress to change the law so that Puerto Rico's public agencies could declare bankruptcy under Chapter 9 - an idea that seemed to gain traction at the White House.


    Earnest said the White House was encouraging Congress to explore possibilities to allow Puerto Rico to make use of Chapter 9, which would allow the commonwealth to restructure its debt amid a nearly decade-long economic slump. Garcia is seeking to defer debt payments while Puerto Rico negotiates with its creditors.

    http://www.abcnews4.com/story/294334...or-puerto-rico

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    Senior Member JohnDoe2's Avatar
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    Here’s What Greek Austerity Would Look Like in America



    1:51 PM ET

    Putting Greece's economic catastrophe into perspective

    MORE

    Markets Rise as Greece Makes Concessions, But No Deal Seen Before Sunday Vote

    Greece Defaults on Debt After Five Years of Bailouts

    British Man Breaks Crowdfunding Site Trying to Bail Out Greece


    Greece is in the middle of a fresh round of economic tumult as its leaders try to negotiate terms for a new bailout package to keep the country financially afloat.

    Since 2010, Greece has been receiving money from the European Union and the International Monetary Fund in exchange for agreeing to harsh spending cuts and tax increases. The steep cost-cutting measures, known as austerity, have become a common practice across Europe as the continent has struggled to regain its economic footing following the global financial crisis of 2008.


    But Greece’s case has been especially extreme. With steep slashes to health funding, salaries and pensions along with huge tax increases, Greek unemployment has skyrocketed, as have the number of people in poverty. As of Tuesday night, Greece had defaulted on a $1.7 billion payment to the International Monetary Fund, and the financial future of the country is looking increasingly dire. Greece will have to agree to even more spending cuts to continue to receive funding.


    To place the severity of Greece’s austerity measures over the last several years in perspective, here’s an idea for how the same types of cuts would impact the United States.


    • Greece’s minimum monthly wage was cut by 22% in 2012, from 751 euros to 586 euros. A similar cut in the U.S. would drop the hourly minimum wage from $7.25 to $5.66.
    • In 2009 and 2010 Greece implemented a variety of cuts to salaries for public sector workers that worked out to an average pay cut of about 15%. In the U.S. that would decrease the average government employee’s pay from $51,340 per year to $43,639, using 2012 figures.
    • Pension cuts have been an especially controversial pain point in Greece, and the combined cuts have lead to a 40% decrease in pension funding since 2009, according to the Associated Press. A similar drop in Social Security payouts in the U.S. would mean the average senior citizen’s monthly would mean a drop in Social Security payouts from$1,294 per month on average to $776 per month.
    • Greece’s national health budget has been slashed by about 40% since 2008, according to the New York Times. Using U.S. health spending figures from 2013, that would drop federal, state and local government spending on health care from $1.25 trillion ($3,980 per person) to $725 billion ($2,388 per person).
    • In 2010 Greece increased the tax on cigarettes by about 20 percent. That would increase the tax on a pack of cigarettes in New York from$6.86 to $7.89.



    http://time.com/3943337/heres-what-g...ke-in-america/
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  6. #6
    Senior Member JohnDoe2's Avatar
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    Senior Member JohnDoe2's Avatar
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    Puerto Rico debt relief bill wins 68 votes in Senate


    June 29, 2016


    A worker takes off U.S and Puerto Rican flag in San Juan, Puerto Rico, May 16, 2016. REUTERS/Alvin Baez
    More

    WASHINGTON (Reuters) - A relief plan to help Puerto Rico address its $70 billion debt cleared a critical hurdle in the U.S. Senate on Wednesday, getting the supermajority it needed to advance to debate and a final vote this week.


    The measure, which got 68 votes, is identical to the plan passed by the House of Representatives earlier this month, as Congress tries to send it to President Barack Obama to sign into law by July 1.

    That is when Puerto Rico faces a potential default on a chunk of its debt if it cannot make a $1.9 billion payment.

    https://www.yahoo.com/news/puerto-ri...iXxE2hC9kpNg--

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