Wednesday, May 3, 2017

Puerto Rico to declare bankruptcy...

Puerto Rico to declare bankruptcy ... and default on $73 billion in “municipal debt”.  The financial situation in Puerto Rico is complicated, not least because of its status as a U.S. Territory.  However, the fundamental cause of their problem is actually closely akin to the problems faced by many American cities: decades of spending beyond their most optimistic means.  I expect to see a dozen or more American cities taking the same route over the next decade, especially as the underfunded pension funds run out of money to pay their pensioners.

I have stayed away from municipal bonds as an investment for over 15 years now.  As my mother-in-law might say, they look worser every day...

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