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Smith's Research & Gradings
Volume: 
XXVIII
Issue: 
13
Author: 
August 3, 2020

Smith's Research & Gradings

Should State and Local Bailout Come With Strings?

One of the great lessons from the Puerto Rico bankruptcy was never to draw to an inside straight — in other words, state and local government politicians need to play the hand that is dealt.

The Governor of Puerto Rico was called to testify before the Senate Committee, whose chairperson asked "Who is in charge?" All the Governor needed to say was "You".

Instead, The Governor insisted the $120 bln. in federal funds be provided to him without any strings. Any conditions to the aid would violate Puerto Rico's sovereignty. He had $70 bln. in par value of defaulted bonds to prove it. He rang-up $30 bln. from Hurricane Maria. He had 15 bln. in unfunded pensions. Puerto Rico received $2 bln. in grant money and $3 bln. in federal loans for specific pre-approved projects.

Clearly, the temptation to "not waste an emergency" can result in politicians running up spending just when cutting costs and expenses are required.
Analysts and investors need to be aware of the political event risks when considering a municipal bond.

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Stay on top of the latest global news that can impact your investment strategy.

Finance New Orleans: Increasing Resiliency and Affordability

Resilient New Orleans Innovation Challenge was created to identify innovative technologies that demonstrate the ability to lower the overall cost of building components and increase resiliency and affordability for tenants and homeowners.

Disastrous Puerto Rico Elections

Puerto Rico's elections were a mess. On Sunday, August 9, Puerto Rico was forced to partially suspend voting for primaries marred by a lack of ballots, as officials called on the president of the Commonwealth's elections commissioner Juan Ernesto Davila to resign. The primaries for voting centers that had not received ballots by early Sunday afternoon were expected to be rescheduled, while voting would continue elsewhere, the commission said.

Outlook Negative

California High Speed Train May Jump the Tracks

Oracle co-founder Larry Ellison and Tesla founder Elon Musk both agree when it comes to California's $77 billion high-speed rail project—the project is going to jump the tracks.

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