News Story of the Day: United States Treasury Secretary Jack Lew issued a letter to Congress urging them to amend bankruptcy laws so Puerto Rico could go bankrupt. The fledgling U.S. territory is billions of dollars in the red and its own governor conceded that it’ll be unable to pay back the debt. The debt stands at $72 billion.
In a letter to Utah Republican Senator and Senate Finance Committee Chairman Orrin Hatch, Lew wrote:
“A central element of any federal response should include a tested legal bankruptcy regime that enables Puerto Rico to manage its financial challenges in an orderly way,” Lew stated. ” An untested and potentially disruptive process with numerous creditor lawsuits and years of litigation would depress the local economy, increase costs and make long-term recovery harder to achieve.”
Lew noted that Puerto Rico’s financial freefall would affect retirees because much of the bonds are held by individual investors. He confirmed, however, that there would be no bailout for Puerto Rico a la Goldman Sachs and Morgan Stanley.
“Allowing Puerto Rico to resolve its liabilities under the supervision of a bankruptcy court involves no federal financial assistance and is in no way a federal bailout.”
Chart of the Day: The U.S. Census Bureau released data on the inner workings of the economy, and one part that was vastly interesting, which was touched upon by the American Enterprise Institute, is the homeownership rate. The chart below suggests the homeownership rate is at a near half-century low at just over 63 percent.
Illustration of the Day: President Ronald Reagan once joked that the most dangerous words in the English language are: “Hi, I’m from the government and I’m here to help.” Pretty much when any politician or bureaucrat promises to help you hide your wallet and run away!
Quote of the Day: Today’s quote comes from economist Friedrich Hayek, in which he history has been nothing but inflation for government.
“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”
Video of the Day: It’s nauseating to think that this whole one percent bologna has been around since Phil Donahue was on television. But it was! Milton Friedman was one of the most prominent men to lambast this whole income inequality fallacy, and he did a mighty fine job. In honor of his birthday, here is a video of an exchange between Friedman and Donahue.
P.S. Happy Birthday Milton Friedman! You have been a great inspiration to me, except on monetary policy.
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