This is exactly how Greece's downward spiral began five years ago. The only difference is the names of the parties involved, but the template is identical:
As demonstrators waved Puerto Rico flags, shook maracas and held signs that read “U.S. banks play roulette and the people pay the debt,” commonwealth officials won little support among investors for plans to restructure the island’s $72 billion debt burden.
Participants from among the more than three hundred representatives of institutional investment firms, hedge funds and insurance companies that assembled at Citigroup Inc.’s New York headquarters Monday to hear Puerto Rico officials make their case said they were left with no new clarity on which of the island’s long-term obligations will undergo the most change. Officials have yet to say whether the cash-strapped island will repay bonds maturing in nineteen days.
“They can’t go much further into negotiations without some specifics,” Joseph Rosenblum, director of municipal credit in New York at AllianceBernstein Holding LP, which manages $32 billion of municipal bonds, including Puerto Rico securities, said outside Citigroup’s Park Avenue offices after attending the meeting. “And they’re just not there yet.”
Creditors wanted to hear more after the island said it planned to craft a debt restructuring plan by August 30th. The meeting focused on a report prepared for Puerto Rico by three former International Monetary Fund officials. Released two weeks ago, it recommends that the island persuade investors to exchange old bonds for new ones with later maturities and lower debt payments.
Same gimmie-gimmie protesters. Same skeptical creditors locked into a position where they don't really have any power to refuse endless bailouts that will make the hilariously ironicly named island "commonwealth"s debt addiction even worse. And the same profligate government that created the mess, bankrupted itself, and cratered its economy, but refuses to own any of it:
It was Puerto Rico’s first meeting with investors after Governor Alejandro Garcia Padilla last month said the junk-rated commonwealth can’t afford to pay its debts. Prices on Puerto Rico bonds have fallen amid concern that the island of 3.5 million is veering toward an unprecedented default, after selling more debt than any U.S. State except New York and California. [emphases added]
Let that one sink in for a little while, then try to sleep ever again.
Melba Acosta, president of the Government Development Bank, which handles the island’s debt sales, said during the meeting that it was “premature” to discuss which securities may be affected until officials develop a plan to improve the island’s finances.
“I ask for your patience while we develop a credible plan,” she said during the address, which was broadcast live on the Internet.
The Obama Regime initially claimed that there would be no federal bailout, but we all know what a big, steaming pile that is. No, Congress would never approve it, but O has his pen, phone, and putter, so Governor Padilla will get his cash one way or the other.
The more intriguing question is what will happen if The One rides off into the (Illinois? Hawaii? Nairobi?) sunset when he's supposed to eighteen months and six days from now. It seems a virtual certainty that a President Scott Walker would cut off Puerto Rico's gravy train, leading to the same radicalization of the gimmie-gimmie, "austerity is an insult" populace as took place in Greece. My prediction? Puerto Rico declares its independence of the U.S. by 2020 and enters into an alliance with Castroid Cuba, setting off a Caribbean domino effect that turns the Straits of Florida - one of the strategic waterways of the world - the Bahamas, and even the Gulf of Mexico (think tottering, corrupt Mexico would be immune to that momentum?) into a communist lake.
On the bright side, at least then Donald Trump's recommended invasion of Mexico would start making some sense.
UPDATE (7/15): The Puerto Rico bailout has begun.
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