America’s home-grown “Greece” is trapped in a vicious circle as a shrinking economy and an exodus of workers pushes the debt ratio through the roof
Puerto Rico has triggered the biggest municipal default in US history, risking years of bitter legal warfare with creditors and an austerity “death spiral” with echoes of Greece.
The island Commonwealth finally ran out of money on Monday after a desperate effort to stay afloat, and missed a final deadline for a $58m payment – handing over just $628,000.
It implies a sweeping default on much of its $72bn debt burden, equal to 100pc of Puerto Rico’s gross national product (GNP) and more than five times the debt ratio of California or Texas.
So now they do it. Now the IMF comes out with a report that says Greece needs hefty debt restructuring.
Mind you, their numbers are still way off the mark, in the end it’s going to be easily double what they claim. Not even a Yanis Varoufakis haircut will do the trick.
Why go through 5 months of ‘negotiations’ with Greece in which you refuse any and all restructuring, only to come up with a paper that says they desperately need restructuring, mere days after they explicitly say they won’t sign any deal that doesn’t include debt restructuring? Continue reading
Ecuador, Egypt, Pakistan, Venezuela, Belize, Cuba, Cyprus, Greece, Jamaica and Ukraine are all on the verge of a default, according to Moody’s ratings.
Argentina defaulted for the second time in 12 years after hopes for a midnight deal with holdout creditors were dashed, setting up stock and bond prices for declines on Thursday and raising chances a recession could worsen this year.
After a long legal battle with hedge funds that rejected Argentina’s debt restructuring following its 2002 default, Latin America’s third-biggest economy failed to strike a deal in time to meet a midnight deadline for a coupon payment on exchange bonds.