Tag Archives: Latin America

Economic exodus means two-thirds of Puerto Ricans may soon live in US

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“Unable to pay its $73bn debt, Puerto Rico has begun rationing water,closing schools and watching its healthcare system collapse and 45% of its people living in poverty. Emigration to the mainland has accelerated in recent years, activists say, and data shows that from 2003 to 2013 there was a population swing of more than 1.5 million people. As a US territory, the semi-autonomous island does not have the same authorities that allow others to file for Chapter 9 bankruptcy, as Detroit did to cope with its own disastrous finances. Today, 60% of Puerto Ricans live in the States and 40% on the island according to a 2014 Pew report, with most moving to Florida.”

http://www.theguardian.com/world/2015/jul/02/puerto-rico-economy-exodus-us-mainland

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Is your bond fund invested in Puerto Rico?

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“Some of the top-performing municipal bond funds over the past five years have held huge stakes in Puerto Rican debt. Now that Puerto Rico’s governor has said the island’s roughly $72 billion in debts are ‘not payable’ and asked for U.S. bankruptcy protection for the commonwealth, investors in those funds may take a big hit.  U.S. bond funds have an $11.3 billion total exposure to Puerto Rican debt as of June 29, according to mutual fund firm research Morningstar.  See a list of 20 bond funds with the most exposure to Puerto Rican debt below.  U.S. mutual funds are only required to disclose their holdings quarterly.”

http://www.cnbc.com/id/102798839

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Trouble Could Be Looming for Puerto Rico Bond Insurers

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“Assured Guaranty Ltd., MBIA Inc. and Radian Group Inc. have ‘substantial’ exposure to Puerto Rico bonds that in some cases outstrip the assets available to cover unexpected losses, according to Moody’s.  A 2028 bond without bond insurance recently traded at about 74 cents on the dollar, according to the Electronic Municipal Market Access website.  Some municipal-bond investors questioned the value of bond insurance following the financial crisis, when bond insurers suffered losses after guaranteeing risky mortgage-backed securities and lost their top credit ratings. The number of new municipal bonds that carry bond insurance has fallen in recent years.”

http://blogs.wsj.com/moneybeat/2014/07/07/trouble-could-be-looming-for-puerto-rico-bond-insurers/

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Puerto Rico’s Crisis Deals a Blow to Municipal-Bond Funds

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“In a low-interest rate world, Puerto Rico’s bonds have offered investors juicy yields over the past several years. Puerto Rico’s $3.5 billion in general-obligation bonds issued in 2014 initially had a yield of 8.7%. The yield on 10-year U.S. Treasury notes, by contrast, hovered between 2% and 3% last year.  But now investors are getting a fast lesson on the risk that comes with those sorts of high yields. More than half of all U.S. municipal-bond funds, or 298 of 565, have invested in Puerto Rico’s debt, according to the most recent fund holdings compiled by Morningstar.”

http://blogs.wsj.com/moneybeat/2015/06/30/puerto-ricos-crisis-deals-a-blow-to-municipal-bond-funds/

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Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’

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“Puerto Rico’s governor, saying he needs to pull the island out of a ‘death spiral,’ has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions. It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state. A broad restructuring by Puerto Rico sets the stage for an unprecedented test of the United States municipal bond market, which cities and states rely on to pay for their most basic needs, like road construction and public hospitals.”

http://www.nytimes.com/2015/06/29/business/dealbook/puerto-ricos-governor-says-islands-debts-are-not-payable.html

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Millions in Brazil Follow a Teen Leader to Freedom

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“The catalyzing events behind Brazil’s freedom movement are high taxes, massive corruption and cronyism, rising price inflation amid a sluggish economy, and the widely perceived incompetence of President Dilma Rousseff and her socialist-leaning Workers’ Party.  It gained significant attention on June 1 when it organized a campaign against taxes that make up 60 percent of the price of beer. And though no political party in Brazil has been committed to liberty since the 19th century, one is now in the making. The Novo (‘New’) Party has gathered the signatures necessary for the next step: certification by the government so it can field candidates in elections.”

http://fee.org/freeman/detail/millions-in-brazil-follow-a-teen-leader-to-freedom

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When a government spies on its citizens: lessons from Chile

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“What are the deep, long-term effects of clandestine surveillance on a country? The current debates in Congress regarding the renewal — or modification — of the Patriot Act offer an occasion to hold an open discussion that is long overdue.  My own experience may be relevant to that discussion.  It was on Sept. 12, 1973, the day after a military coup overthrew the democratically elected government of Chile, that I started to understand that language was also a victim when massive state spying permeates a hitherto free nation.”

http://www.latimes.com/opinion/op-ed/la-oe-0531-dorfman-surveillance-censorship-20150531-story.html

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The Latin American startup movement gaining momentum

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“An incubator is usually the physical space where entrepreneurs deposit the eggs of their ideas, and keep them warm until they are ready to ‘hatch.’  Many coworking spaces also function as incubators. Reports that there are over 141 coworking spaces in Latin America.  Brazil leads the coworking trend with 95 spaces and counting.  Once the business concept is ready to see daylight, the founder can enroll in an accelerator program.  In 2014, Fundacity issued a report on the accelerators of Latin America.  They noted that the total investment in the Latin American region was US$35,381,944 in 872 startups by 53 accelerators.”

http://nomadcapitalist.com/2015/05/06/latin-american-startup-movement-gaining-momentum-030/

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Pacific Alliance: Mexico, Chile, Colombia, Peru, Costa Rica growing fast

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“Four countries—Mexico, Peru, Colombia and Chile—three years ago formed a free-trade bloc called the Pacific Alliance. Tiny Costa Rica joined the club in 2013. Together, they’re a bigger economy than Brazil, and they’re expected to grow three or four times faster than their huge neighbor over the next few years.  The five Pacific Alliance members, with a collective GDP of $2.2 trillion, are expected to grow 3.3 percent in 2014, and 4 percent in 2015. Economic reforms within individual member states can take some of the credit. All of the countries have free trade agreements with the United States, but the Alliance takes down barriers between the countries themselves.”

http://www.cnbc.com/id/102537826

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Venezuela Moves to Nationalize Food, Ration Medicine, Kill Comedy

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“The crisis in Venezuela is escalating, and it’s not funny anymore.  Socialist President Nicolás Maduro, successor to the Hugo Chavez regime, has announced he will use his ‘decree powers’ to nationalize the country’s food distribution network.  Milk, flour, and toilet paper may be hard to find, but money can always be located for public employees: ‘Maduro also announced a 30-percent increase in public wages on Friday.’ The government blames ‘hoarding’ — whatever that means — for [medicine] shortages. But doctors and pharmacists blame government price controls, production regulations, and trade restrictions for cutting off the supply.”

http://fee.org/anythingpeaceful/detail/venezuela-moves-to-natonalize-food-ration-medicine-kill-comedy

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