UPDATED 3:43 CST – GREECE DEFAULTS TO IMF
Gold prices are lower in a.m. trading Tuesday morning as the ongoing Greek crisis escalates with German Chancellor Angela Merkel saying “NO” to Greece’s request for a two year bailout from ESM. Gold last reported a.m. is $1169.50 and silver is $15.57.
In last ditch efforts to avoid economic collapse, Athens say’s it will fight for a viable deal until the end and within the euro. This will be the message of the “No” vote. We will say No to a bad deal on Sunday. From the first moment we made clear that the decision to conduct a referendum is not the end but a part of the negotiation for better terms. Greece remains at the negotiating table.
Despite Merkels earlier rejection, EU finance members are scheduled to hold a teleconference today possibly reconsidering Greece’s request for the ESM loan.
Not to be outdone, the Governor of Puerto Rico warned that his nation cannot pay its $72 billion public debt. The governor said an analysis by former World Bank and International Monetary Fund officials showed the “harsh reality” of the economic situation.
“Our public debt…is unpayable,” he said. “The report states even if we increased taxes and cut back spending, the magnitude of the problem is such, because of the weight of the debt we carry, that it would solve nothing.”
The inability of Puerto Rico to repay its debts, combined with the financial crisis in Greece, will have far-reaching implications for global markets and unsuspecting investors. Morningstar, an investment research firm based in Chicago, estimated in 2013 that 180 mutual funds in the U.S. and elsewhere have an estimated 5% of their portfolios in Puerto Rican bonds.
Since the mid-seventies, Puerto Rico has been borrowing vast amounts of money hoping it would somehow boost its lagging economy. Between 2000 and 2102 the governments public debt rose from $24 billion to $74 billion.
Puerto Rico’s bond rating remains at “junk status” as citizens continue leaving the island for the U.S. in hopes of a better life.
The Governor said its now up to Puerto Rican’s and the islands creditors to assume shared sacrifices to get the island on firm legal ground. Making its impoverished citizens feel that somehow they are to blame for governmental fiscal abuse is a page taken right out of Washington’s playbook. We’ve often commented that when the U.S. debt clock does implode, Washington politicians will grandstand over their “great accomplishments” while telling ordinary working trash Americans it’s now our civic duty to clean up their mess.
Those individuals coming to the U.S. are a day late and a dollar short when it comes to seeking the now extinct “American Dream.” U.S. national debt has guaranteed bankruptcy especially as foreign countries move away from the dollar into other assets, namely China, gold and silver.
The U.S., like the “Titanic,” sank many years ago and unfortunately this once great nation is now ridiculed by those who in times past feared us for doing what is right. We have the unfortunate privilege of viewing our nation as it sleepwalks into insolvency and irrelevancy. Shame on us!
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