BREAKING NEWS: Greece Surrenders its Sovereignty to Brussels
I need to pay mind for the tip, and you need to pay attention to the many additional articles there. I checked WRH as of 8:30 a.m. my time and he must not know about it yet or still sleeping. I'm sure he will have something to say about it.
Related: Greek Crisis Now a Concern
I've gotten nothing but mixed me$$ages from the Globe, and its the SOP.
"Greece, Puerto Rico turbulence unlikely to hurt US economy" by Steven Syre GLOBE COLUMNIST JUNE 30, 2015
The banks are closed in Greece. The stock market in China is plunging. Puerto Rico says it can’t pay its bills.
After a long spell of tranquility, investors in the United States and most other developed countries are suddenly dealing with a heavy dose of uncertainty.
As the alternative press warned for months and months.
The US stock market fell about 2 percent Monday. The Dow Jones industrial average lost 350.37 points.
There will be more turbulence ahead, but nothing investors here shouldn’t be able to ride out.
That's what they always say.
Most of Monday’s action was prompted by worries over Greece, which is approaching yet another turning point in its long-running debt crisis. And something important may actually happen this time.
Greece has shuttered its banks and its stock market ahead of a referendum next Sunday that will let voters decide whether they prefer to stick to more creditor-mandated austerity in return for access to more money or just say no and live with the consequences — which could mean an exit from the European Union and a return to the country’s own currency.
Tsipras said yes.
Brinksmanship is nothing new in debt negotiations between leaders in Europe and Greece. But a Greek departure from the group of 28 European countries — once so feared as an economic calamity — wouldn’t be such a big deal now beyond the borders of Greece itself.
In the midst of the global economic crisis, many European banks and other investors owned Greek debt. Default would have been a disaster. Today, those investors have sold their bonds and most Greek debt at risk is owned by the likes of the European Central Bank and the International Monetary Fund.
Those banks printed money to buy crap and en$lave the Greeks further, just as the Fed has done here.
As a currency, the euro started Monday by losing ground to the dollar. But the euro had actually appreciated by the end of the day. The market’s message: A departure by Greece from the EU wouldn’t be such a bad thing over time.
Huh? Then what was with all the hand-wringing?
“The world has had time to prepare, that’s what has transpired,” said Jeff Mortimer, the director of investment strategy for BNY Mellon Wealth Management in Boston, which holds $194 billion in client assets.
Years ago, investors also worried that Greece could create a domino effect among weaker European nations if it defaulted on its debts. Struggling countries like Spain, Portugal, and even Italy could follow.
That’s not much of a threat today. The interest rates on short-term debt issued by those other countries, generally below 3 percent, suggest no one is worrying now about dominoes falling in Europe.
In China, stocks have plunged nearly 22 percent since mid-June. That would normally be a good reason to panic.
But the sudden bear market in China follows a period of wild stock price gains that began last summer. The Shanghai Composite stock index soared more than 150 percent over 12 months by the time it peaked on June 12.
It's only bad when it happens to the AmeriKan casino.
Investment strategists attribute the soaring gains to low interest rates, a rapid growth of individual investors in the market, and a kind of stock mania that took hold. They say the gains certainly weren’t triggered by evidence of robust economic growth and the pricking of the stock bubble doesn’t signal a dire turn for China’s economy beyond the slowdown that was clearly underway.
Related: Sunday Globe Special: Buying Back Stock
Turned into a one-day wonder.
In Puerto Rico, the island’s governor said it could not pay its debts of $72 billion. The latest development in the long-running municipal debt debacle drove down the price of some of Puerto Rico’s bonds below 70 cents on the dollar.
Puerto Rico’s debt levels are more than three times as high as any US state relative to economic output. Even worse, the island’s weak economy is actually contracting.
“Puerto Rico is a very specific situation,” said Ken Taubes, chief US investment officer at Pioneer Investment Management in Boston. “It’s hard to sustain debt when you’re shrinking.”
Puerto Rico’s bonds are widely owned by US municipal bond mutual funds, which owned the debt for its relatively high yield. Investors in those funds would feel the effects of a bond default.
F*** cities and towns across this great land.
US markets react to financial problems around the world — in Greece, China, and even Puerto Rico — but American investors remain much more focused on issues at home. Chief among them: How and when the Federal Reserve will begin to raise interest rates.
That's because the only investors left here are money-junkies.
The US economy has been improving steadily, adding more than a million jobs over the first five months of this year. The Fed could move as soon as September to begin raising rates.
Yeah, if you want to believe that corporate pre$$ narrative.
“The Greek situation, if it got really, really bad, or if China had a really hard [economic] landing, could affect the Fed’s timing,” said Eric Stein, codirector of fixed income at Eaton Vance Corp. in Boston. “The US is not insulated from the rest of the world, but I tend to be a believer in the US economy.”
Yup, gonna TAKE IT ON FAITH!!!!
American markets, so calm for so long, are getting a jolt this week. But that’s all it is so far.
Yup, everything's all right, everything's fine.
Related: 16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World
"Once again, the Greek debt crisis is causing stock markets around the world to tumble and raising questions about the long-term future and stability of the euro currency and the European Union. Could Greece’s woes wash up on the shores of Massachusetts and stall the state’s thriving economy, which has seen unemployment drop to the lowest levels since 2007? The danger comes if a Greek default and an exit from the euro currency union destabilize the European economy, as some economists fear could happen."
Then it's Syre the liar, isn't it!
"For stocks, the worst day of the year; Volatility returns as Greek crisis heats up" by Matthew Craf and Steve Rothwell ASSOCIATED PRESS JUNE 29, 2015
NEW YORK — Fears that Greece’s troubles could spread through the global financial system shook markets on Monday, giving US stocks their worst day of the year.
There is nothing to fear.
Investors fled from stocks in Europe and the United States and retreated to the safety of government bonds.
Because governments can always extract another pound of flesh from their citizens when it comes to the demands of bankers.
Measures of volatility spiked. In many ways, it looked similar to previous episodes in Europe’s long-running debt crisis. But this time, investors said they weren’t quite as worried.
What did I say about being jerked around with mixed messages?
A series of events over the weekend left Greece perilously close to defaulting on its debts.
It's perilous, but not serious!
Prime Minister Alexis Tsipras said his government would hold a referendum on budget proposals made by the country’s lenders. European officials have refused to extend the country’s bailout program without new commitments by Greece.
Jeff Carbone, a senior partner at Cornerstone Financial Partners, said the real worry isn’t so much Greece, a country with an economy roughly the size of Missouri’s. ‘‘It’s the contagion risk. If Greece goes, who’s next? This isn’t about Greece; It’s what happens next.’’
That's what I've said.
‘‘We are really looking at a situation where the market doesn’t know what the fallout is going to be,’’ said David Lafferty, chief market strategist at Natixis Global Asset Management. ‘‘But the US market feels that it is relatively contained at this point.’’
Name sounds familiar, and so does the shoveled bs.
The last time Greece’s troubles shook US markets, there were plenty of other problems.
In 2012, Spain had entered a recession, and the worry was that it was too big of a country to rescue. Sputtering US job growth added to the anxiety. That spring, the S&P 500 index lost 9.9 percent within two months. Investors sought safety in US Treasury bonds, driving long-term interest rates to historic lows. The fear was that a financial crisis would spread from Greece to the rest of Europe ‘‘because these economies were very fragile,’’ Cavanaugh said.
The ratings agency Standard & Poor’s said Monday that it interprets the Greek government’s decision to hold a referendum as a sign that it will put ‘‘domestic politics over financial and economic stability, commercial debt payments, and eurozone membership.’’ The agency says it now sees a 50 percent chance of Greece dropping the euro currency.
And that made certain people mad!
If Greece defaults and switches to a new currency, it’s sure to shake global financial markets. But the world is unlikely to see anything like the full-blown crisis of 2008. A few years ago, banks across Europe were loaded down with loans to the Greek government, corporations, and banks. Things have changed since then.
I can't take anymore of this banker$peak.
‘‘Today, the European banks have shed much of their Greek debt and they have significantly increased their capital,’’ says Mark Zandi, chief economist at Moody’s Analytics. ‘‘A Greek default and exit from the euro zone would be devastating to Greece’s economy, but no one else’s. . . . The Greek standoff will be disconcerting to financial markets, but only temporarily.’’
The European Central Bank has already committed to buying 60 billion euros a month in corporate and government bonds to push down interest rates and help the European economy. It could buy even more, and flood financial markets with cash, to calm jittery European investors....
Yeah, except the "qualitative easing" does nothing but devalue the currency and enrich the already wealthy.
Speaking of withdrawals.....
"Greeks endure withdrawal limit, closed banks" by Derek Gatopoulos and Lorne Cook ASSOCIATED PRESS JUNE 30, 2015
ATHENS — Anxious retirees swarmed closed bank branches Monday and long lines snaked outside ATMs as Greeks endured the first day of serious controls on their daily economic lives ahead of a referendum that could determine whether the country has to ditch the euro currency and return to the drachma.
Seeing as the government capitulated, there is no poll to worry about.
Prime Minister Alexis Tsipras was defiant, urging voters to reject creditors’ demands, insisting a “No” vote in Sunday’s referendum would strengthen Athens’s negotiating hand.
“We ask you to reject it with all the might of your soul, with the greatest margin possible,” he said on state television. “The greater the participation and the rejection of this deal, the greater the possibility will be to restart the negotiations to set a course of logic and sustainability.”
I'll get to the polls later.
Greece’s bailout program ends Tuesday, when the country is unlikely to make a $1.8 billion repayment to the International Monetary Fund. But Athens and creditors from the IMF and the eurozone failed to agree on terms for an extension.
Tsipras called the referendum over the weekend, saying demands for tougher austerity measures could not be accepted after six years of recession.
Then he accepted them.
The move shook the world’s financial markets, saw Greek borrowing rates skyrocket, and set off a credit downgrade from Standard & Poor’s, which said it now sees a 50 percent chance of Greece leaving the eurozone. That stoked fears of a crippling bank run, a messy Greek debt default, and a euro exit.
They have had that, and that is how bankers punish you.
Really, it is becoming time to cull that whole crowd.
Greeks were handed a daily $67 cash withdrawal limit, sending crowds of elderly depositors who do not have ATM cards rushing to closed bank branches.
“I came here at 4 a.m. because I have to get my pension,” said Anastasios Gevelidis, 74, one of about 100 retirees outside the National Bank of Greece in Thessaloniki. “We don’t even have enough money to buy bread,” he said.
Already took your health care away. Just keeping you down.
Investors worry that should Greece leave the euro and say it can’t pay its debts, which stand at more than 300 billion euros, it will be forced into a chaotic return to the drachma — developments that could derail a fragile global economic recovery as well as raise questions about the long-term viability of the euro currency itself.
The drachma would be better for them, as I noted in my previous post.
“The major market concern is that if Greece were to default and/or exit, then it might encourage others to do the same,” said Gary Jenkins, chief credit strategist at LNG Capital. “Thus it puts the entire eurozone project at risk of collapse.”
But nothing to worry about, according to the Globe.
That idea was hammered home by European leaders.
The European Commission’s president, Jean-Claude Juncker, said he felt betrayed by Tsipras’s leftist government and called on Greeks to oppose him.
“I very much like the Greeks, and I’d say to them, ‘You should not commit suicide because you are afraid of death,’ ” he said.
Throughout Greece, massive lines formed at gas stations, with worried motorists seeking to fill up their tanks and pay with credit cards while they were still being accepted.
Good thing it couldn't happen here, right, Amurkn?
Credit and cash card transactions have not been restricted, but many retailers were not accepting card transactions Monday.
Electronic transfers and bill payments are allowed but only within Greece. The government also stressed the controls would not affect foreign tourists.
For emergency needs, such as importing medicine or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.
There was talk of Greece joining the BRICs, and:
Greek Bailout Proposal Falls Short of Creditor Demands- No new deal
Interesting. Because the news below directly contradicts much of the
positive reporting I had read earlier this morning-
Must have paid a paid a penny for my thoughts.
"Greece fails to make debt payment" by Jack Ewing and James Kanter New York Times June 30, 2015
FRANKFURT — Greece added its name Tuesday to a roster that includes some of the world’s poorest and worst-governed nations, including Iraq, Sudan, Somalia, and Zimbabwe. Those are a few of the countries that have missed payments to the International Monetary Fund — as Greece did Tuesday, when it failed to make a loan payment of about $1.7 billion to the fund.
Greece is not technically in default — the International Monetary Fund said it was in arrears —but missing the payment is an unmistakable warning that the country will probably be unable to meet obligations in coming weeks, to bondholders and to the European Central Bank. That might make the central bank less willing to continue emergency loans that have been propping up Greek banks for several months.
In declaring Greece in arrears, the term “default” was avoided.
Yeah, let's play word games and manipulate things!
Credit rating agencies will not consider Greece to be in default based on missing the payment, for the technical reason that the International Monetary Fund is not a commercial borrower.
But the ratings agency Standard & Poor’s said it would designate Greece as being in default if payments cannot be made to private creditors. Two billion euros in Greek Treasury bills are due July 10.
And once found in arrears, Greece is barred from receiving more money until it settles the debt. That is a problem, because the International Monetary Fund has been a crucial partner with the European Union in working with Greece, providing not only money but financial and economic expertise.
Well, then they are a bunch of idiots because the "expertise" has been wrong.
The International Monetary Fund confirmed that Greece had failed to make the payment, after a 6 p.m. Washington deadline came and went.
Gerry Rice, a spokesman, said the board will consider Greece’s request, made Tuesday, to extend the loan payment deadline.
Separately, Greece’s European creditors rejected an eleventh-hour attempt by Athens to extend the international bailout program.
It was the clearest signal yet of the political and financial dysfunction in Greece, which on Sunday announced it will close its banks for at least a week to prevent panicked depositors from withdrawing money.
Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington, said delinquency would put Greece in ignoble company.
“They are joining countries we would normally regard as failed and failing states,” Kirkegaard said. “The symbolism is quite dramatic.”
I'm sick of reading banker $ymboli$m and illu$ion, sorry. It's $erious, not $erious, blah, blah.
Greece is the first developed country to miss a payment. And the missed payment is the largest in the fund’s history. Sudan still owes about $1.4 billion from loans acquired in the 1980s.
It's that why the guy is being charged with war crimes?
Countries that have fallen behind more recently include Iraq, Bosnia, and Afghanistan. All three later settled their obligations.
All places where NATO has brought wars, notice that?
The European Central Bank, which has kept Greek banks on life support during the debt negotiations, is allowed to finance only solvent banks. Because Greece’s banks and the government are tightly linked, it would be hard to consider Greek banks solvent when their government is not paying its bills.
A last-minute bailout proposal that the government of Prime Minister Alexis Tsipras made Tuesday to European creditors was said to exclude the International Monetary Fund’s involvement.
You Greeks gonna go vote?
"Greece holds to plan for a popular vote; Creditors reject more talks; referendum on austerity nears" by Elena Becatoros and Menelaos Hadjicostis Associated Press July 01, 2015
ATHENS — The Greek government vowed Wednesday to go ahead with plans to have the people decide whether they want more austerity measures in exchange for a rescue deal. Greece offered more concessions to its creditors, but was rebuffed — eurozone finance ministers refused to negotiate more aid until the referendum clears up what the country wants.
The moves came on a fast-paced day of zigs and zags that saw the prime minister back off his earlier refusal to consider creditors’ belt-tightening demands, yet hold firm on putting the measures to a popular vote. Following a late-night teleconference, the 19 eurozone finance ministers said they were putting talks on hold.
‘‘Given the political situation, the rejection of the previous proposals, the referendum which will take place on Sunday, and the recommendation by the Greek government to vote ‘No,’ we see no grounds for further talks at this point,’’ said Foreign Minister Jeroen Dijsselbloem of the Netherlands, who heads the eurozone finance ministers’ body known as the eurogroup.
Earlier Wednesday, Prime Minister Alexis Tsipras was defiant, saying the referendum would be held as planned Sunday and again urging citizens to vote ‘‘No.’’ He said a ‘‘No’’ result would not mean Greece would have to leave the euro, as many European officials have contended. Rather, Tsipras maintained, it would give the government a stronger negotiating position with creditors.
Greece has been in financial limbo since its bailout program expired at midnight Tuesday, cutting it off from vital financing and pushing it one step closer to leaving the euro. It also became the first developed country to fail to repay a debt to the International Monetary Fund on time.
In Athens, crowds thronged banks before dawn, trying to withdraw the maximum $134 for the week after the government reopened some banks for three days to help pensioners who lack ATM cards. Banks were ordered closed starting Monday to avoid a banking system collapse.
Still, there was good news: The terms of Greece’s emergency $100 billion cash support were left unchanged. Finance Minister Yanis Varoufakis thanked the European Central Bank and its president, Mario Draghi, for the decision. ‘‘This allows us to breathe. It’s a very positive move and a move of good will on the part of the European Central Bank,’’ Varoufakis said.
He then dropped to his knees, undid fly, pulled down trou.... well, you can imagine the rest.
Draghi, he said, had faced down ‘‘hawks’’ among eurozone members who had demanded that Athens increase the collateral needed to receive continued assistance.
I love banking doves, don't you (almost as much as elite insults)?
Sunday’s referendum is based on creditor proposals made last week and roundly rejected by the Greek government. But in a letter sent late Tuesday, Tsiparis reversed course and said his government was prepared to accept the earlier proposals, subject to certain amendments on central points of contention, including pensions and tax increases. He linked acceptance of the terms to a new bailout package.
UPDATE: Now there is a question of whether he sent it at all.
But some of Greece’s main creditors — including Germany, the largest contributor to Greece’s bailout — contended it was not good enough and that a deal was impossible before the vote. ‘‘We will wait for the referendum,’’ Chancellor Angela Merkel said. ‘‘There can be no negotiations on a new aid program before the referendum.’’
Now they want a rigged vote to validate even more mi$ery!
President François Hollande of France urged an agreement before then, saying it was the responsibility of other countries to keep Greece in the eurozone.
‘‘We have to be clear. An accord is for right now, it will not be put off,’’ said Hollande, a Socialist who has been one of the few remaining EU allies of Greece’s leftist government.
The more accurate term is $ociali$t.
The AmeriKan bu$iness pre$$ is already laying the narrative for a rigged vote, even though the polls still show a wide margin for no! That's why the Greeks must be demonized, and not just New Dawn.
UPDATE: Greece Cancels Referendum
Nothing to worry about now.
What I usually do when intractable problems appear is turn too the Globe for answers:
"US must signal support for Greece" by The Editorial Board July 02, 2015
Up until now, President Obama’s speak-softly strategy on Greece made a certain degree of sense. The country’s financial crisis, and its long-running disputes with the rest of Europe over how to solve it, were not America’s problem. Obama has largely deferred to European leaders, even as the impasse deepened over the last six months.
Over the past week , though, some of those European politicians turned the crisis into a more profound question about Greece’s future in Europe. It’s an unhelpful escalation in rhetoric, which the United States shouldn’t endorse. With Greeks headed for a key referendum on Sunday, Obama should make clear that the United States will respect either outcome, and continue to support Greece.
The referendum follows years of disagreements about how to handle Greece’s large debt. Unable to pay its bills, the government in Athens received a bailout from Europe in 2011. The money came with conditions attached that required spending cuts and tax hikes — the much-hated “austerity.” Tired of cuts, Greeks elected an anti-austerity party in January, but its leaders have been unable to convince the rest of Europe to ease back their demands.
The referendum puts the question to Greek voters: Do they want to continue to suffer under austerity, or spurn the final offer of the creditors and risk the consequences? A “no” vote would probably lead to Greece’s exit from the euro, with potentially devastating economic consequences, but it would also free Greece to devalue its new currency and perhaps ultimately revitalize its economy. It’s a painful decision that voters in democracies have the right to make.
To hear some European politicians tell it this week, though, the vote is about more than economics — it’s a question of whether Greece wants to secede from its place in the West. Jean-Claude Juncker, the president of the European Commission, said a “no” vote “would mean Greece is saying ‘no’ to Europe.” Politicians from France, Germany, and Italy have also been ratcheting up pressure on Greece to vote “yes” by characterizing the vote in such existential terms.
That kind of talk has the dangerous possibility of turning into a self-fulfilling prophesy. But the eurozone is not the European Union, and the European Union is not Europe. Greece is still a democracy and a NATO ally, and the United States should publicly distance itself from the rhetoric that seems aimed at scaring Greek voters. It would be better for the United States if Greece remained in the euro, but it’s not vital.
If Greece votes “no” on Sunday, it’ll still be an American ally on Monday. For Obama to say so — and do it in public, even at the risk of appearing to break with European leaders — might counter the unhelpful pressure campaign from Europe that seems aimed at browbeating Greece into a “yes” vote. Greek voters face two bad choices in Sunday’s referendum. But they deserve the space to cast their votes based on what they conclude is best for their country’s economy and future, without fear of international ostracization.
Too late now. Vote will be meaningle$$.
I also found it disingenuous that the Globe didn't mention any protests. I suppose they wouldn't want to give Americans any ideas, or are shielding the privileged elite from such troubling things:
"Hopes for a deal between Greece and its creditors — hopes that by Wednesday night seemed unwarranted — pushed stocks higher. But despite the day’s rally, stocks were still lower for the week. The US market logged its worst day of the year on Monday as fears that Greece could leave the euro currency union set off a global stock market rout. Yet ‘‘Monday’s reaction to Greece was largely overdone,’’ in the opinion of Bob Pavlik, at Boston Private Wealth. ‘‘I don’t think the ramifications of Greece defaulting would be that dire for the global economy.’’ In the United States, investors got two encouraging reports on Wednesday. The payroll processor ADP said businesses added 237,000 jobs last month, the most since December. A separate survey from the Institute for Supply Management showed manufacturing growth improved in June, rising to the highest level this year. In deal news, Chubb jumped 26 percent after rival insurer Ace said it was buying the company in a deal valued at $28.3 billion. Airline stocks were among the losers after the US government confirmed it’s investigating possible collusion to limit seats and keep airfares high."
"The US government is investigating possible collusion among major airlines to limit seats, which keeps airfares high, according to a document obtained by the Associated Press. On a day when the overall stock market was up, stocks of the major US airlines ended the day down by 1 to 3 percent on news of the investigation. The airlines publicly discussed capacity last month in Miami at the International Air Transport Association’s annual meeting. After hearing about the meeting, Senator Richard Blumenthal, Democrat of Connecticut, requested a Justice Department investigation. In the past two years US airlines earned record profits, a combined $19.7 billion. This year could bring even higher profits thanks to a massive drop in the price of jet fuel, the airlines’ highest expense. That worries Wall Street analysts and investors. Cheap fuel has led airlines to rapidly expand and make other money-losing decisions in the past."
What took them so long, and why weren't the savings passed on to passengers?
It's enough to make one angry enough to stay in the airport bar instead. Might be a good idea anyway given the warnings coming from the FBI.
"The US stock market stabilized on Tuesday as investors followed the latest developments in the Greek debt saga. Stocks edged higher a day after the market had its worst day of the year — a slump prompted by the breakdown in talks between Greece and its creditors. US markets closed with Greece’s European bailout program scheduled to end eight hours later, at midnight, and with no agreement on an extension or a new deal with creditors. Despite Monday’s slump, many investors were confident the US economy will sustain its recovery. ‘‘Even if it’s the worst-case scenario and Greece drops out [of the eurozone], the pullback probably wouldn’t be gigantic,’’ said Scott Wren, at Wells Fargo Investment Institute. In Europe, the Stoxx 50 index of leading shares fell 1.3 percent, Germany’s DAX dropped 1.2 percent, and the CAC-40 in France fell 1.6 percent. Willis Group rose 3.3 percent after the insurance broker said it will merge with Towers Watson in an $18 billion all-stock deal. Bond insurers fell sharply as investors followed Puerto Rico’s debt crisis. Standard & Poor’s said a default or a restructuring of the island’s debt appears inevitable."
Oh, yeah, Puerto Rico:
"Puerto Rico will seek to delay paying debts" by Danica Coto Associated Press June 30, 2015
SAN JUAN, Puerto Rico — Puerto Rico’s governor said Monday night that he will form a financial team to negotiate with bondholders on delaying debt payments and then restructuring $72 billion in public debt he says the US island can’t repay.
Bondholders don't like that.
Governor Alejandro Garcia Padilla made the announcement just hours after international economists released a gloomy report on Puerto Rico’s economy — another jolt to the recession-gripped island as well as to a world financial system that’s trying to avoid a collapse in Greece’s finances.
Garcia said he would seek a repayment moratorium of several years but gave no specifics.
‘‘Even if we increase revenues and cut costs, the magnitude of the problem is such that we would not resolve anything given the weight of the debt we’re dragging,’’ he said. ‘‘The only way we’ll get out of this hole is to join forces and agree, including bondholders, to assume some of the sacrifices.’’
The team has until Aug. 30 to develop a plan, which would require legislative approval to take effect. Legislators are currently debating a $9.8 billion government budget that calls for $674 million in cuts and sets aside $1.5 billion to help pay down the debt.
Garcia said urgent action is needed. ‘‘The inherited debt is so big that it bars us from accessing the financial markets and our economy does not generate enough revenue to repay our obligations,’’ he said.
That is a signal to do nothing and stay still.
Anne Krueger, a former World Bank chief economist who worked on the report commissioned by Garcia’s administration, presented the findings ahead of Garcia’s address. ‘‘The situation is dire, and I mean really dire,’’ she said.
Actually, it isn't (according to following article).
Puerto Rico’s bonds were popular with US mutual funds because they are triple-tax exempt, but hedge funds and distressed-debt buyers began stepping in to buy up debt as the island’s economy worsened and its credit rating dropped.
Sergio Marxuach, of the Center for the New Economy, drew parallels between Greece and Puerto Rico. ‘‘The lack of transparency of public finances, the bad quality of statistics, the massive tax evasion, the government corruption . . . it’s the same in Greece like in Puerto Rico,’’ he said.
A report released Monday by Krueger and others said Puerto Rico’s public debt is larger than originally thought and urged the government to act quickly.
‘‘This is a daunting agenda politically, legally and organizationally. It is also an urgent one: The government’s cash balances can evaporate in the face of delays, reducing the room for maneuver and intensifying the crisis,’’ the report said.
Bailouts always are.
The economists praised Garcia’s administration for taking action on higher taxes, pension reforms, spending cuts, and freezes, but noted revenue projections systematically exceed collections, and policy failures have hurt Puerto Rico’s economy. ‘‘Growth has not just been low, but output has actually been contracting for almost a decade now, which is remarkable for an economy suffering neither civil strife nor overt financial crisis,’’ the report said.
The White House threw cold water on the idea of bailing out Puerto Rico but urged Congress to consider changing the law to let the island’s government declare bankruptcy.
They only bailout bankers and well-connected interests and concerns.
Did you learn anything there?
"Puerto Rico’s problems shine light on states’ debts" by Megan Woolhouse Globe Staff July 02, 2015
Puerto Rico’s admission this week that it can’t make its loan payments has again called attention to the high levels of debt carried by some US states. At the top of the list: Connecticut and Massachusetts.
Another legacy of Deval Patrick! We got meningitis murders, botched marijuana clinics, a burgeoning heroin problem, state drug lab scandals, dead kids under DCF watch, state websites that didn't work as we were lied to about them, a $2 billion budget hole for the next guy, etc, etc, etc. Those are only the ones I could think of off the top of my head. It's a long list.
The Southern New England neighbors have the highest tax-supported debt per capita among states, according to the New York bond-rating firm Standard and Poor’s Financial Services LLC.
You're being milked.
Connecticut owed $18.2 billion, the equivalent of $5,081 for every resident, compared with an average of $1,346 for all states.
That is why they are keeping an eye on certain people.
Massachusetts’ $32.4 billion in debt translates to $4,847 per person, according to Standard & Poor’s.
That's what you owe banks, citizens.
But these debt loads are deceiving, because of the structure of state and local governments in New England, and don’t approach the burden of Puerto Rico, which owes the equivalent of more than $11,000 per resident. In addition, Massachusetts and Connecticut have larger and stronger economies to produce the revenues to service their debts.
I'm being deceived by somebody.
Massachusetts’ economy, which generates more than $400 billion a year in goods and services, is four times larger than Puerto Rico’s economy of about $100 billion. Massachusetts’ tax-supported debt is equivalent to about 7 percent of economic output; Puerto Rico’s is 40 percent, according to Standard & Poor’s.
“That’s a vast difference,” said Robin Prunty, a managing director at Standard & Poor’s in New York.
Not really; still enslaved to the central bank greed-heads.
Tax-supported debt is borrowing that is paid off with sales, property, or other taxes. It excludes debt, for example, from government enterprises such as sewer authorities or power companies that finance borrowing through fees charged to customers.
This week, Puerto Rico’s governor, Alejandro Garcia Padilla, called the island’s $70 billion in debt — of which about $41 billion is tax supported — “unpayable” and sought to restructure the loans to avoid default, an event that could roil the municipal bond market and lead to higher borrowing costs for US states and cities.
They have nowhere to go but up.
Massachusetts has done plenty of borrowing over the past few decades, taking on billions of dollars of debt to finance the cleanup of Boston Harbor, complete the Central Artery project known as the Big Dig, and build schools.
Related: True cost of Big Dig exceeds $24 billion with interest, officials determine
"Legislators also agreed last week to change legal language in the recently passed sales tax hike to assure credit agencies that $100 million earmarked for the Turnpike Authority would go toward paying off Big Dig debt."
At least you got a clean harbor out of it.
But the major reason that Massachusetts, as well as Connecticut, ranks so high in debt compared with other states is that county governments play only small, if any, roles in New England, Prunty said.
In many states, counties finance a large share of road, building, and other projects that state governments in New England pick up, Prunty said. In Florida, for example, about 50 percent of the government borrowing is done through counties, which is not reflected in state debt figures.
If county spending is included, Massachusetts’ and Connecticut’s debt levels fall to “about the middle” of the 50-state pack, Prunty said. Also contributing to the relatively high debt levels, she said, is that Massachusetts and Connecticut fund school construction primarily at the state level, Many other state governments don’t.
Massachusetts and Connecticut are high-income states that can afford their levels of debt, Prunty said. Standard and Poor’s gives both states high credit ratings, reflecting their financial strength and ability to pay their loans.
Connecticut has an AA credit rating, and Massachusetts’ is slightly higher at AA-plus, just a notch below the top rating of AAA, according to Standard and Poor’s.
Didn't those guys label all the CDO junk AAA?
Prunty said Massachusetts was shy of the top credit ranking because of large obligations to state worker pensions and retiree health benefits that the Legislature has not sufficiently funded.
Also see: Why The Puerto Rico Debt Crisis Is Such A Huge Threat To The U.S. Financial
The Globe told me it wasn't!