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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.

Take notice

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

Clean Energy Needs Reliability Requirement

Clean energy needs to include reliability requirement as new technology advances. Transformation of the energy mix used in electricity generation globally has been focused on development of renewable sources of energy such as wind and solar, but the major stumbling block has remained reliability.

Outlook Positive

SpaceX blasts through a major milestone with first manned mission

This joint public/private venture between NASA and SpaceX begins a new chapter in space exploration. How will this effect future commercial demands in space?

Beirut’s Agony: Ports, Food, and China

On August 4th the port of Beirut was the scene of a horrific explosion, which killed more than 150 people, injured 6,000 and left some 300,000 homeless. The damages are estimated to be in excess of $15 billion. The city’s hospitals, already struggling due to the COVID-19 pandemic, were damaged by the blast and swamped with injured. On top of already raging economic and political crises, the explosion now raises the question of food security. Prior to the explosion, 80 percent of Lebanon’s imports passed through Beirut’s port. Without a functioning port in Beirut, the country now relies on a handful of secondary ports, chief among them being Tripoli in the north, to import food and to export its products.

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