Re:Puerto Rico files for biggest ever U.S. local government ...
by erikpukinskis on Wednesday May 03, 2017 @11:22PM
(#14262184)
> For the next few decades no one will lend money to them unless backed by some kind of collateral like government land or revenue proceeds from tolls
Sounds like normal debt raising. No one will give you money unless you have a plausible story of how it gets paid off.
Why do you consider it a good thing to be able to borrow money you have no plan to pay off?
Re:Puerto Rico files for biggest ever U.S. local government ...
by prostoalex on Wednesday May 03, 2017 @11:59PM
(#14262344)
I don't. I was just pointing out that laissez-faire business-as-usual nothing-to-see-here-folks attitude is rarely suitable for municipal bankruptcies.
None of the recently bankrupt municipal entities in the US - Stockton, Detroit, San Bernardino - are fun to live in, and most are in a downward spiral of cutting government services, which leads to employers leaving, which leads to residents moving, which leads to cutting government services, etc.
While a reasonable idea in abstract, it's of little value to Puerto Rico and its residents.
For the next few decades no one will lend money to them unless backed by some kind of collateral like government land or revenue proceeds from tolls, and their ability to raise money via other means is highly questionable, as servicing current debt has likely exhausted all of the obvious venues.
Every borrower in the municipal market will pay a higher price for this, as funds and other institutional investors will deal with write-offs and potential fund outflows.