Puerto Rico bond prices fell Wednesday after President Donald Trump said the U.S. territory’s roughly $70 billion in debt may get out wiped out to help the island recover from Hurricane Maria.- WSJ“You can say goodbye to that,” Mr. Trump said in an interview on Fox News during his visit to Puerto Rico. It wasn’t immediately clear how the U.S. would do that.
Goodbye says Trump, and so it will be gone!
Is this realistic? If not, why do the bond markets even react to this statement? If yes, how is this conceivable? What needs to happen for PR to be able to file for Bankruptcy? Is bankruptcy the best solution in the long term?
His comments on North Korea definitely had effect on gold over the past few months. Why wouldn't the markets react to this?
Because that's something he has control over as the Commander in Chief, unlike forgiving PRs debt.
Government bonds would lose massive creditability throughout the world. Some of it is in retirement and pension accounts too..
Why would other government bonds lose creditability too? Is it simply because people start to realize default, or debt forgiveness is possible, or is it more complex?
Even if you personally don't think that forgiving PR's debt is realistic, if you think other people in the market believe it to be realistic, you may still react in a similar way.
Moreover, if you think other people in the market think that other people in the market believe it to be realistic, you may still react in a similar way.
So an information arbitrage kind of thing, which is not really grounded in anything but what people think other people thing about new information?
All that debt is just not going to vanish.
Yesterday I was reading that Baupost still held some of the PR bonds which piqued my interest. Why would a guy like Seth Klarman be holding onto bonds that supposedly have no value?
I believe he will be running the same play that he did with Iceland when their banks collapsed. He bought over bonds, if i remember correctly, of these banks which were trading for cents at the time only to make a huge profit later on.
So its abundantly clear that all that debt is not going to vanish into thin air, and I guess the markets knows this too.
Curious if trump will be wiping out Mar-a-Lago debt as well
No, it is not even close to being realistic. President Trump has made so many off-hand promises only to have his very own administration curtail him. Whether it is Chinese tariffs or withdrawing from NATO. OMB Director Mulvaney said that the White House wasn't going to pay off PR's debt less than 24 hours after Trump made the remark.
The other fact is even if the Trump administration was 100% for wiping out PR's debt, it would never pass the House or Senate. Not even the Democrats have been crazy enough to propose simply wiping PR's debt.
#PRLM Puerto Rican Lives Matter: Trump Waives the Jones Act (Originally Posted: 09/28/2017)
Today, Donald Trump waived the Jones Act, a century-old piece of legislation that required Puerto Rico to import goods from U.S. owned and operated ships. This often created extra shipping costs for imports, resulting in prices to consumers nearly twice as high as they otherwise would've if foreign imports were allowed. Puerto Rican government officials pleaded with Trump to waive the Jones Act to better enable Puerto Rico's disaster relief efforts.
This decision comes after Trump admitted that there was pressure from those in the U.S. shipping industry not to waive the Jones Act.
Waiving the Jones Act means good news for Puerto Ricans, who can now import goods that their citizens want and need at cheaper costs (resulting in lower prices of goods for consumers). This comes at a time of desperate need for the Puerto Rican economy, which has recently been devastated by Hurricane Maria and a government debt crisis that forced Puerto Rico to declare bankruptcy.
What do you all make of this? Are you team #PRLM (Puerto Rican lives matter) and do you support free market initiatives that result in lower prices for consumers? Or are you team #MAGA and think that jobs should stay in the U.S.???
https://www.cnbc.com/2017/09/28/trump-authorizes-jones-act-shipping-res… http://money.cnn.com/2017/09/27/news/economy/jones-act-puerto-rico/inde…
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