NEXT GREECE MAY BE IN USA…
The fear was that elevated pension costs, in cities like Chicago, might push these public entities into insolvency, wiping out much of the holdings of municipal-bond investors.
Once a sleepy corner of the municipal bond market — often not even properly reflected on cities’ balance sheets — public pensions have recently turned into the biggest headache for taxpayers and municipal-bond investors, threatening to bring down the finances of U.S. cities and states.
In some places, like Puerto Rico, Illinois, New Jersey and Chicago, entire balance sheets of cities or states hang in the balance.
Detroit, as well as three Californian cities — Vallejo, Stockton and San Bernardino — had to declare bankruptcy because of their overwhelming pension costs.
In those cases, the courtroom turned into a brutal battlefield pitting bond investors trying to save the money they invested in those cities’ municipal bonds on one side. And on the other side have been public employees trying to save the dwindling pensions that were promised to them.
Recent cases have shown that bond investors are clearly losing this battle.
In the bankruptcies of Detroit, Vallejo, Stockton and San Bernardino, bondholders have faced losses of up to 99% of their holdings, according to a Moody’s report dated May 18. Meanwhile all three California cities chose to preserve full pensions for their employees, while Detroit only cut pensions by approximately 18%.
http://www.marketwatch.com/story/these-lurking-debts-may-turn-us-cities-states-into-greece-2015-06-30
Reality hits San Juan streets amid Puerto Rico debt woes…
SAN JUAN
http://www.miamiherald.com/news/nation-world/national/article25818208.html
Fallout Will Hit Florida…
As WLRN has reported this year, the U.S. commonwealth of Puerto Rico is staggering under $73 billion in debt. The Caribbean island’s governor is giving a speech this afternoon to announce it’s unpayable. And that could have a significant economic impact here in South Florida.
How bad is Puerto Rico’s financial crisis? Its debt load equals three-fourths of its entire economy. Governor Alejandro García Padilla has conceded that Puerto Rico can no longer make payments on a debt that massive.
Annual trade between Florida and Puerto Rico is about $2 billion. Bankruptcy attorney Charles Tatelbaum of the Fort Lauderdale law firm Tripp Scott says Puerto Rico’s collapse will hit Florida.
“Florida businesses and especially South Florida businesses are the largest provider of goods and services to Puerto Rico,” says Tatelbaum. “When the government can’t pay its bills, it cannot pay those vendors who sell to the government. But more importantly it can’t pay the Puerto Rican businesses that deal with the government, who in turn cannot pay their Florida suppliers.”
http://wlrn.org/post/puerto-ricos-crushing-debt-unpayable-and-fallout-will-hit-florida
The fear was that elevated pension costs, in cities like Chicago, might push these public entities into insolvency, wiping out much of the holdings of municipal-bond investors.
Once a sleepy corner of the municipal bond market — often not even properly reflected on cities’ balance sheets — public pensions have recently turned into the biggest headache for taxpayers and municipal-bond investors, threatening to bring down the finances of U.S. cities and states.
In some places, like Puerto Rico, Illinois, New Jersey and Chicago, entire balance sheets of cities or states hang in the balance.
Detroit, as well as three Californian cities — Vallejo, Stockton and San Bernardino — had to declare bankruptcy because of their overwhelming pension costs.
In those cases, the courtroom turned into a brutal battlefield pitting bond investors trying to save the money they invested in those cities’ municipal bonds on one side. And on the other side have been public employees trying to save the dwindling pensions that were promised to them.
Recent cases have shown that bond investors are clearly losing this battle.
In the bankruptcies of Detroit, Vallejo, Stockton and San Bernardino, bondholders have faced losses of up to 99% of their holdings, according to a Moody’s report dated May 18. Meanwhile all three California cities chose to preserve full pensions for their employees, while Detroit only cut pensions by approximately 18%.
http://www.marketwatch.com/story/these-lurking-debts-may-turn-us-cities-states-into-greece-2015-06-30
Reality hits San Juan streets amid Puerto Rico debt woes…
SAN JUAN
The signs of a struggling economy can be seen in the
shuttered restaurants and bars in previously thriving Old San Juan. In
the faces of business owners who spend much of their day trying to coax
customers through the doors. In statistics that show the island’s
population has plunged over the past decade. And in the sense of
indifference from people who can’t afford to leave and have become used
to a hard life.
“Were not going up or down; we’re stuck,” said Rosa Arias, a spunky 70-year-old who stopped earning an income three years ago as a babysitter when the parents of those children lost their own jobs. “I manage to eat and sleep, but that’s it. I live day to day.”
“Were not going up or down; we’re stuck,” said Rosa Arias, a spunky 70-year-old who stopped earning an income three years ago as a babysitter when the parents of those children lost their own jobs. “I manage to eat and sleep, but that’s it. I live day to day.”
Arias’ existence is part of the “harsh reality” outlined Monday night
by Gov. Alejandro García Padilla, who said the U.S. territory can’t pay
back some $72 billion in public debt and called on Puerto Ricans to
share in making sacrifices.
Puerto Rico’s dilemma is sure to affect the international financial system, which is already wobbling from the economic turmoil in Greece.
Puerto Rico’s dilemma is sure to affect the international financial system, which is already wobbling from the economic turmoil in Greece.
Fallout Will Hit Florida…
As WLRN has reported this year, the U.S. commonwealth of Puerto Rico is staggering under $73 billion in debt. The Caribbean island’s governor is giving a speech this afternoon to announce it’s unpayable. And that could have a significant economic impact here in South Florida.
How bad is Puerto Rico’s financial crisis? Its debt load equals three-fourths of its entire economy. Governor Alejandro García Padilla has conceded that Puerto Rico can no longer make payments on a debt that massive.
Annual trade between Florida and Puerto Rico is about $2 billion. Bankruptcy attorney Charles Tatelbaum of the Fort Lauderdale law firm Tripp Scott says Puerto Rico’s collapse will hit Florida.
“Florida businesses and especially South Florida businesses are the largest provider of goods and services to Puerto Rico,” says Tatelbaum. “When the government can’t pay its bills, it cannot pay those vendors who sell to the government. But more importantly it can’t pay the Puerto Rican businesses that deal with the government, who in turn cannot pay their Florida suppliers.”
http://wlrn.org/post/puerto-ricos-crushing-debt-unpayable-and-fallout-will-hit-florida
No comments:
Post a Comment