Your Survival Guy

Preparing your investments and family for when disaster strikes.

Compensation was paid to utilize rankings. Click here to read full disclosure.

Bond and Pension Struggle in Puerto Rico

By

8759149055_1d0e7849c6_bYou get an idea how the struggle between bondholders and pensions quickly turns into a political nightmare, as reported in the WSJ:

San Juan, Puerto Rico—One of the thorniest tasks awaiting a seven-member board charged by Washington with cleaning up Puerto Rico’s debt crisis is deciding how to balance a $70 billion debt load with nearly $43 billion in unfunded pension liabilities.

The issue is coming to a head now because the White House is set to name as soon as next week the members of that oversight board, drawn from lists of candidates submitted by congressional leaders in both parties.

Puerto Rico’s constitution calls for the island to pay its general-obligation bonds ahead of public services or pensions, but a law signed by President Barack Obama in June clouds that hierarchy by directing the new board to ensure pensions are adequately funded.

For the oversight board, “there are no good options here,” said Matt Fabian, a partner at research firm Municipal Market Analytics. Cutting payouts to debtholders ahead of pensions will inflame creditors, but cutting pension payments to plan members could accelerate the migration and economic decline that the oversight board is tasked with stemming.

Creditors fired a pre-emptive volley last month when they sued the island’s government in federal court after it passed a budget that increases funding for pensions without setting aside money for debt payment. The budget diverts “vast resources to purposes that apparently enjoy political favor but are indisputably junior to constitutional debt,” the complaint said.

The following two tabs change content below.
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

Recent Posts from YourSurvivalGuy.com

It’s California vs. Florida in the Big State Debate

On Thursday, November 30, Fox News and the station’s primetime personality, Sean Hannity, will host a debate between California Governor Gavin Newsom and Florida Governor Ron DeSantis. Isabella Simonetti explains the debate in The Wall Street Journal, writing: They aren’t running against each other. Still, Ron DeSantis and Gavin Newsom will take their fiery feud to Fox News this […]

Shiffrin Brings It Home with World Cup Win at Killington

You have read about the amazing career of competitive skier, Mikaela Shiffrin. Last time she appeared on YourSurvivalGuy.com, she had notched her 87th World Cup win. It was already safe to put Shiffrin in the GOAT category of athletes near Tom Brady, Michael Jordan, and Michael Phelps. No one has ever dominated skiing the way […]

Prepare for Solar Storms in 2024

The sun experiences solar storms in a roughly eleven-year cycle, and according to scientists, that cycle could peak next year. The peak of this cycle, called the “solar maximum,” has the potential to hit the earth with solar storms that can damage satellites and even electronics on the ground. Jonathan Chadwick reports for the Daily […]

Can the Supreme Court Stop Wealth Taxes Before They Start?

You probably haven’t heard of Moore v. United States, a little-known case working its way through the courts that could have major implications for America’s savers and business owners. The case revolves around the government’s power to tax unrealized gains. These are gains on assets that an owner hasn’t locked in yet, and which could […]

Families Can’t Save Enough

American households are the least prepared they’ve been in a decade to cover an unexpected $2,000 expense. That’s a sign that inflation and slow wage growth have hurt the ability of Americans to save. Bloomberg’s Alexandre Tanzi reports: The ability of US households to cover an unexpected $2,000 expense is at the lowest level in […]

Biden’s Inflation Blame Game

First, it was the “Putin price hike,” now Biden is blaming inflation on corporate greed, an old and tired excuse. CNBC reports: President Joe Biden took aim at corporations Monday for charging prices he said were artificially high even though the rate of inflation has slowed and some shipping costs have fallen. “Any corporation that has not brought […]

Are Investors Ready to Pounce?

Investors waiting to pounce? Not buying it. They finally have rates they can sink their teeth into. They’re in no rush to take on more risk. At least, that’s not what they’re telling me. In The Wall Street Journal, Jack Pritcher suggests investors are looking for more risk. He writes: Stocks and bonds have surged […]

Disney Signals Problems with the ESG Agenda

You have read about Disney’s war against Florida Gov. Ron DeSantis and parental rights. Now, it appears that Disney is realizing the error of getting involved in America’s culture wars in order to boost its ESG rankings. Johnathan Turley writes in The Hill: In recent filings, Disney appears to acknowledge that Smith’s invisible hand is […]

Biden Gave Americans 10 Years of Inflation in Only 3

Americans have endured a decade’s worth of inflation during the three years Joe Biden has lived in the White House. Bloomberg’s Reade Pickert and Jennah Haque report on the cost-of-living squeeze Americans are suffering through today, writing: After years of inflation, US consumers are shouldering a burden unlike anything seen in decades — even as […]

Happy Black Friday

You know how Your Survival Guy feels about money: save a third, spend a third, pay taxes with a third. Well, today, let’s focus again on the spending. One of the best ways to keep you motivated and in the game is to take some trips every now and then. Life Comes at You Fast. […]

Which Jimmy Buffett Album Is Your Favorite?

This year, America lost one of its best-loved musicians, Jimmy Buffett. Over his career, Buffett released 32 albums, and Al Shipley at SPIN Magazine has ranked them, writing: Shortly before his death in September at the age of 76, Buffett finished his 32nd studio album Equal Strain on All Parts, backed by his longtime Coral Reefer […]

More Americans than Ever Own Guns

You have probably heard the phrase “voting with your wallet.” When it comes to the Second Amendment, that’s exactly what Americans are doing. More Americans own guns than at any time since polls began back in 1999. Today, 52% of Americans report owning a gun or living in a household that owns a gun. Alexandra […]

Happy Thanksgiving!

When the pilgrims of the Mayflower landed, many of the men signed the Mayflower Compact, which read: In the name of God, Amen. We whose names are underwritten, the loyal subjects of our dread Sovereign Lord King James, by the Grace of God of Great Britain, France, and Ireland King, Defender of the Faith, etc. […]

Preparing You and a Loved One for Thanksgiving

Your Survival Guy’s here to help you prepare for Thanksgiving dinner. Not with the turkey, stuffing, or desserts but with the conversation. We all know the third rails of holiday conversation: religion, politics, and money. And not in any particular order. I think politics and religion have worn everyone out and are only brought up […]

The Next Ronald Read? Save Til It Hurts

You read the story of Ronald Read in Richard C. Young’s Intelligence Report. The Brattleboro, VT gas station attendant amassed an $8 million portfolio of investments by the time of his death in 2015 at age 92. While Read was stacking stock certificates on the west bank of the Connecticut River, just across the Brattleboro […]