Puerto Rico Debt unpayable.....

Having concluded last night that Puerto Rico debt is "unpayable," and that his government could not continue to borrow money to address budget deficits while asking its residents, already struggling with high rates of poverty and crime, to shoulder most of the burden through tax increases and pension cuts, Padilla confirmed tonight that (from Bloomberg):

• *PUERTO RICO TO SEEK "NEGOTIATED MORATORIUM", 'YEARS' OF POSTPONEMENT IN DEBT PAYMENTS

Likening his state's situation to that of Detroit and New York City (though not Greece), Padilla concluded, the economic situation is "extremely difficult," which is odd because just a few years ago when they issued that bond - everything was awesome?

When will PR overtake Greece again?

Puerto Rico's Governor is speaking on national TV:

• *PUERTO RICO DEBT IS UNPAYABLE, GOVERNOR SAYS
• *PUERTO RICO DEBT LOAD WON'T LET ISLAND OVERCOME RECESSION: GOV.
• *PUERTO RICO GOV. SAYS HE DOESN'T AGREE W/ ALL OF KRUEGER REPORT
• *PUERTO RICO GOVERNOR SEEKS CREATION OF FISCAL BOARD
• *PUERTO RICO NEEDS COMPLETE RESTRUCTURING PLAN: GOVERNOR
• *PUERTO RICO TO SEEK `NEGOTIATED MORATORIUM' W/ BOND HOLDERS
• *PUERTO RICO MUST HAVE BETTER TERMS TO PAY DEBT: GOVERNOR
• *PUERTO RICO SEEKS ACCORD ON FISCAL REFORMS BY AUG. 30

And the punchline:

• *BONDHOLDERS SHARE RESPONSIBILITY FOR PUERTO RICO'S DEBT: GOV.
• *PUERTO RICO TO SEEK `NEGOTIATED MORATORIUM' W/ BOND HOLDERS
• *PUERTO RICO BONDHOLDERS MUST MAKE SACRIFICES TOO: GOVERNOR
• *PUERTO RICO TO SEEK `YEARS' OF POSTPONEMENT IN DEBT PAYMENTS

We suspect the 70 handle will quickly become a 50 handle or less...

As AP reports,

Puerto Rico's governor says he will create a financial team that will meet with bondholders and seek a moratorium on debt payments.

Gov. Alejandro Garcia Padilla made the announcement Monday night after saying that the U.S. territory's $72 billion public debt is unpayable. He said he would seek a moratorium of several years but did not provide specifics.

Garcia's comments come just hours after international economists released a gloomy report on Puerto Rico's economy.

Legislators are still debating a $9.8 billion budget that calls for $674 million in cuts and sets aside $1.5 billion to help pay off the debt. The budget has to be approved by Tuesday.

As we explained previously,

What happens next is unclear: "Puerto Rico, as a commonwealth, does not have the option of bankruptcy. A default on its debts would most likely leave the island, its creditors and its residents in a legal and financial limbo that, like the debt crisis in Greece, could take years to sort out."

So without the "luxury" of default, what is PR to do? Why petition to be allowed to file Chapter 9 naturally: after all everyone is doing it.

In Washington, the García Padilla administration has been pushing for a bill that would allow the island’s public corporations, like its electrical power authority and water agency, to declare bankruptcy. Of Puerto Rico’s $72 billion in bonds, roughly $25 billion were issued by the public corporations.

Some officials and advisers say Congress needs to go further and permit Puerto Rico’s central government to file for bankruptcy — or risk chaos.

“There are way too many creditors and way too many kinds of debt,” Mr. Rhodes said in an interview. “They need Chapter 9 for the whole commonwealth.”

García Padilla said that his government could not continue to borrow money to address budget deficits while asking its residents, already struggling with high rates of poverty and crime, to shoulder most of the burden through tax increases and pension cuts. Where have we heard that before...

He said creditors must now “share the sacrifices” that he has imposed on the island’s residents.

“If they don’t come to the table, it will be bad for them,” said Mr. García Padilla, who plans to speak about the fiscal crisis in a televised address to Puerto Rico residents on Monday evening. “What will happen is that our economy will get into a worse situation and we’ll have less money to pay them. They will be shooting themselves in the foot.”

And the punchline:

“My administration is doing everything not to default,” Mr. García Padilla said. “But we have to make the economy grow,” he added. “If not, we will be in a death spiral.”

And this one: any deal with hedge funds, who are desperate to inject more capital in PR so they can avoid writing down their bond exposure in case of a default, "would only postpone Puerto Rico’s inevitable reckoning. “It will kick the can,” Mr. García Padilla said. “I am not kicking the can.”

We wonder how long before Tsipras, who earlier was quoting FDR, steals this line too.

And speaking of Prexit,how long before Puerto Rico exits the Dollarzone... and will there be a Preferendum first or will the governor, in his can kick-less stampede, just make a unilateral decision to join Greece, Ukraine, Venezuela and countless other soon to be broke countries in the twilight zone of Keynesian sovereign failures?

*  *  *

But Puerto Rico is not Detroit... well actually it is... worse:

• *PUERTO RICO FACES SIMILIAR SITUATION AS DETROIT, NYC: GOVERNOR

Puerto Rico's debt is nearly half that of California for a population one-tenth the size... (via WSJ)

full story here

Drought....

SAN JUAN, Puerto Rico –  The worst drought in five years is creeping across the Caribbean, prompting officials around the region to brace for a bone dry summer.

From Puerto Rico to Cuba to the eastern Caribbean island of St. Lucia, crops are withering, reservoirs are drying up and cattle are dying while forecasters worry that the situation could only grow worse in the coming months.

Thanks to El Nino, a warming of the tropical Pacific that affects global weather, and a quieter-than-normal hurricane season that began in June, forecasters expect a shorter wet season. That means less rain to help refill Puerto Rico's thirsty Carraizo and La Plata reservoirs as well as the La Plata river in the central island community of Naranjito. A tropical disturbance that hit the U.S. territory on Monday did not fill up those reservoirs as officials had anticipated.

Puerto Rico is among the Caribbean islands worst-hit by the water shortage, with more than 1.5 million people affected by the drought so far, according to the U.S. National Drought Mitigation Center.

Tens of thousands of people receive water only every third day under strict rationing recently imposed by the island government. Puerto Rico last week also activated National Guard troops to help distribute water and approved a resolution to impose fines on people and businesses for improper water use.

The Caribbean's last severe drought was in 2010. The current one could grow worse if the hurricane season ending in November produces scant rainfall and the region enters the dry season with parched reservoirs, said Cedric Van Meerbeeck, a climatologist with the Caribbean Institute for Meteorology and Hydrology.

"We might have serious water shortages ... for irrigation of crops, firefighting, domestic consumption or consumption by the hotel sector," he said.

The Caribbean isn't the only area in the Western Hemisphere dealing with extreme water shortages. Brazil has been struggling with its own severe drought that has drained reservoirs serving the metropolis of Sao Paulo.

In the Caribbean, the farm sector has lost more than $1 million in crops as well as tens of thousands of dollars in livestock, said Norman Gibson, scientific officer at the Trinidad-based Caribbean Agricultural Research and Development Institute.

On St. Lucia, which has been especially hard hit, farmers say crops including coconuts, cashews and oranges are withering.

"The outlook is very, very bad," said Anthony Herman, who oversees a local farm cooperative. "The trees are dying, the plants are dying ... It's stripping the very life of rivers."

Officials in Cuba say 75 percent of the island is enduring a drought that has killed cattle and destroyed thousands of hectares (acres) of crops including plantains, citrus, rice and beans. Recent heavy rains in some areas have alleviated the problem some, but all 200 government-run reservoirs are far below capacity.

In the nearby Dominican Republic, water shortages have been reported in hundreds of communities, said Martin Melendez, a civil engineer and hydrology expert who has worked as a government consultant. "We were 30 days away from the entire water system collapsing," he said.

The tourism sector has also been affected.

Most large hotels in Puerto Rico have big water tanks and some recycle wastewater to irrigate green areas, but many have curtailed water use, said Frank Comito, CEO of the Florida-based Caribbean Hotel & Tourism Association.

Other hotels have cut back on sprinkler time by up to 50 percent, said Carlos Martinez of Puerto Rico's Association of Hotels. "Everybody here is worried," he said. "They are selling water tanks like hot cakes ... and begging God for rain."

Guests at Puerto Rico's El Canario by the Lagoon hotel get a note with their room keys asking them to keep their showers short amid the water shortage. "We need your cooperation to avoid waste," says the message distributed at the front desk of the hotel in the popular Condado district.

At the Casa del Vega guesthouse in St. Lucia, tourists sometimes find the water in their rooms turned off for the day, preventing them from taking a shower. "Even though we have a drought guests are not sympathetic to that," hotel manager Merlyn Compton said.

Full Story Here

Bermuda Triangle, Columbus and Sargassum seaweed...

Seaweed, lots of it. That's been the talk in the Caribbean since last year. If you peruse Caribbean news or blogs you'll no doubt run into discussions about the recent Sargassum seaweed invasion.

Lorrie and I ran into it last November:

It had most all the beaches, except for Sunbay and parts of Caracas, nearly unusable. Not only was it on the beaches, large masses of it were floating out in and around the island. This is not new. The Caribbean has had to deal with Sargassum seaweed in the past, just not in the amounts that have been occurring recently. 

The Sargasso Sea is a 2,000,000-square-mile ellipse-shaped region of the North Atlantic Ocean extending south and east of Bermuda. It's called the Sargasso sea because comparatively large amounts of seaweed of the genus Sargassum can be seen floating on the surface. Although the ubiquitous seaweed might lead one to suppose the Sea to be an unusually fertile stretch of ocean--a marine jungle, as it were--its warm, still waters have actually long been considered something of a desert in biological terms, with relatively little life (except for the seaweed, of course). Like many deserts, though, it does harbor its own unique ecosystem, with organisms that are specially adapted to live among the Sargassum mats, and biologists have more recently begun to appreciate the region's potential as a haven of biodiversity. (Still no mermaids, though.)

The Sea's special properties are a result of it lying in the center of a huge oval of relatively still waters bounded by ocean currents, including the Gulf Stream, which circle it clockwise, sort of like the eye of a very huge, very, very slow, permanent hurricane.

Not only did Columbus encounter the Sargasso Sea, he is credited with its discovery, being the first person to leave an account of it. Columbus, ever the optimist, took the seaweed as a sign that he was close to shore. (In fact, the Sea lies many hundreds of miles from land, except for the tiny Bermuda Islands in its northwestern quadrant.) His sailors, on the other hand, reputedly first vented the oft-expressed fear of becoming entangled in the seaweed.

The Sargasso Sea went on to figure prominently in nautical lore as a place where ships would become entangled by the seaweed, and if you look for information on the Sargasso, be prepared to find a lot of silliness about the "mysterious" Bermuda Triangle. It's all a lot of hooey, though. Although there's more of it in the Sargasso Sea than in some randomly chosen patch of ocean elsewhere, the seaweed there has never been remotely thick enough to hamper a ship from sailing through. A ship could no more be "stuck" in the Sargasso Sea than it could be "stuck" in any other part of the ocean. A fact which undoubtedly added to the popularity of the "ships tangled in seaweed" legend is that the same patterns of currents which form the Sargasso Sea also lead to it being part of the area known as the "doldrums" or the "horse latitudes." Because the winds and currents are relatively calm there, sailing ships frequently found themselves becalmed--trapped not by the humble seaweed but by a lack of wind. Modern ships, of course, are no longer at the mercy of the winds that way, and jetliners are even less so.

There are a lot of questions as to why the recent invasion of seaweed. Climate change, pollution, over fishing and coastal development are just some of the reasons being evaluated. 

:-)

Nov Trip....

Yes...here again planning this years trips. November and Feb we will be staying at Beso Del Carib, again.  Already have those booked. Why? Well it's just a great house for a  cheap price. Views, location, airflow and all that jazz. A kayak that we've yet to use.The owners, Pat and Lori are "top notch" at getting back with you and working out the details.

Still working on airfare. I have purchased the return flight from SJU to back home here in Indiana. For that flight we'll be flying USair. I managed to get first class @ $400 a ticket.  Still haven't booked the flight down yet.  United Airlines (whom we have the frequent flyer card with ) has made their available flights all but non-existent, well unless we want to fly the red-eye.  Not sure how this is going to pan out, I've got my eye on a 6am flight, but they want 70k miles. We'll see about that.

A lot of chatter on TA (trip advisor) about the Malecon lately. What is the Malecon? Where is it located and what does it consist of? I'm thinking this might be a theme for the November trip.  Maybe video the whole thing showing exactly what the Malecon is.   Right now I would really be digging a meat lovers pizza from Lazy Jacks or breakfast at Tradewinds.....gawd we miss the place.

 Yeah the Malecon in November...that's what it's gonna be.

:-)