Puerto Rico to DEFAULT on its debts Monday 2 May – Could Trigger US Bank Collapse
PrepperFortress.com
MAY 2, 2016
The Governor of Puerto Rico has announced that the Commonwealth, an American Territory (but not a state), will DEFAULT on its debts tomorrow, 2 May 2016. Because Puerto Rico is not a state, it cannot avail itself of US Bankruptcy Laws and as such, this will become a VERY messy situation, very fast.
Bond Holders who lent money to Puerto Rico will then lay claim to “Credit Default Swaps” (CDS) a sort of financial “insurance instrument” which will trigger a required payout by the entities which issued those CDS, mainly Banks. Trouble is, most of the banks don’t have enough money to pay the claims! Herein lies a very big risk of “contagion.” This could mean several significant-sized banks in the United States may fail within weeks.
If and when banks begin to fail, Bond Holders who lent money to those banks will then lay claim to THEIR CDS and that will trigger still more banks into default . . . and so on. The potential exists for this single Puerto Rico default, to spread into one of the worst financial catastrophes to take place in modern history!
Is YOUR bank one of the entities which issued Credit Default Swaps? Will YOUR bank be one that goes under?
Bear in mind that last October, US Financial laws changed so that there is now a provision in law which calls for banks to be “bailed-in.” That means folks who have stock in failed banks, or who have bonds from those failed banks, LOSE THEIR MONEY to resolve the failed bank! This is euphemistically called a “haircut” but for some investors, it’s a baldy! Some investors get NOTHING.
Watch financial markets very closely this week. If things go bad, they will go bad at lightning speed. Too late for many people to get out and save themselves.
THIS IS WHAT ECONOMIC COLLAPSE LOOKS LIKE
The Rest…HERE
