04-18-2020, 09:18 AM
terracore - There is a precedent for the federal government to bailout a government through bankruptcy- they did it with Puerto Rico.
Thanks for that - an interesting read although the Feds haven't really bailed out Puerto Rico yet, still just trying to figure out the process. Regardless, they appear to have several parallels to here as well as some hints as to what may be in our future if the Feds choose not to lend a hand or as least some greenbacks.
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"The government has also been unable to set up a system based on meritocracy, with many employees, particularly executives and administrators, simply lacking the competencies required to perform their jobs."
...
"What we are asking for is runway to establish these reforms and have Washington recognize that they have a role to play."
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"He proposed austerity measures cutting payments to government pensioners, who do not receive Social Security, by 10%, prompting criticism from the island's chapter of the Service Employees International Union."
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"On May Day protests residents angry about the Governor's proposed subsidy cuts shouted: "Ricky is selling the island!"[13] As soon as a court stay expired on May 2, 2017, bondholders and a bond insurer sued the Commonwealth for full and timely debt repayment.[78] On May 3, Governor Rossello reacted by asking the Oversight Board to file in federal district court for debt relief under PROMESA, proceedings which will be very similar to bankruptcy.[78] On May 5 [...] the Puerto Rico Department of Education announced plans to close 184 schools."
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"On July 2, 2017, the Puerto Rico Electric Power Authority filed for bankruptcy protections under PROMESA for its $9 billion in bond debt.[80] On August 7, 2017, Aurelius Capital Management had Theodore Olson file another lawsuit, now alleging that the selection of the Oversight Board violated the Appointments Clause of the U.S. Constitution.[81] After touring the damage from Hurricane Maria on October 3, 2017, President Donald Trump announced: "They owe a lot of money to your friends on Wall Street. We're going to have to wipe that out."[82] When markets opened the next day the price on the Commonwealth's General Obligation bonds dropped to all-time lows of 32 cents on the dollar.[83] Mick Mulvaney, the White House Director of the Office of Management and Budget, then said that the president should not be taken literally and clarified that "[w]e are not going to bail them out".[83] The Commonwealth's $123 billion liabilities from debt ($74 billion) and unfunded pension obligations ($49 billion) are much larger than the $18 billion Detroit bankruptcy, the recordholder for municipal bankruptcies conducted under Chapter 9.[78] The debt restructuring procedure will also be unprecedented in that it is governed by Title III of PROMESA instead of Chapter 9 of the U.S. Bankruptcy Code."
Thanks for that - an interesting read although the Feds haven't really bailed out Puerto Rico yet, still just trying to figure out the process. Regardless, they appear to have several parallels to here as well as some hints as to what may be in our future if the Feds choose not to lend a hand or as least some greenbacks.
---
"The government has also been unable to set up a system based on meritocracy, with many employees, particularly executives and administrators, simply lacking the competencies required to perform their jobs."
...
"What we are asking for is runway to establish these reforms and have Washington recognize that they have a role to play."
...
"He proposed austerity measures cutting payments to government pensioners, who do not receive Social Security, by 10%, prompting criticism from the island's chapter of the Service Employees International Union."
...
"On May Day protests residents angry about the Governor's proposed subsidy cuts shouted: "Ricky is selling the island!"[13] As soon as a court stay expired on May 2, 2017, bondholders and a bond insurer sued the Commonwealth for full and timely debt repayment.[78] On May 3, Governor Rossello reacted by asking the Oversight Board to file in federal district court for debt relief under PROMESA, proceedings which will be very similar to bankruptcy.[78] On May 5 [...] the Puerto Rico Department of Education announced plans to close 184 schools."
...
"On July 2, 2017, the Puerto Rico Electric Power Authority filed for bankruptcy protections under PROMESA for its $9 billion in bond debt.[80] On August 7, 2017, Aurelius Capital Management had Theodore Olson file another lawsuit, now alleging that the selection of the Oversight Board violated the Appointments Clause of the U.S. Constitution.[81] After touring the damage from Hurricane Maria on October 3, 2017, President Donald Trump announced: "They owe a lot of money to your friends on Wall Street. We're going to have to wipe that out."[82] When markets opened the next day the price on the Commonwealth's General Obligation bonds dropped to all-time lows of 32 cents on the dollar.[83] Mick Mulvaney, the White House Director of the Office of Management and Budget, then said that the president should not be taken literally and clarified that "[w]e are not going to bail them out".[83] The Commonwealth's $123 billion liabilities from debt ($74 billion) and unfunded pension obligations ($49 billion) are much larger than the $18 billion Detroit bankruptcy, the recordholder for municipal bankruptcies conducted under Chapter 9.[78] The debt restructuring procedure will also be unprecedented in that it is governed by Title III of PROMESA instead of Chapter 9 of the U.S. Bankruptcy Code."