Nobody seemed to know just what President Donald Trump was talking about when he said he wanted to “wipe out” Puerto Rico’s $74 billion in debt.
“You know, they owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” Trump said on Fox News Tuesday.
“You can say goodbye to that. I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”
This was proving to be yet another Trump blurt that leaves people both inside and outside his own administration reading tea leaves, offering interpretations and guessing what, if any, plan he has in mind.
Here we go again.
Investors logically took the remarks as bad news for the value of the island’s bonds. The territory’s general obligation bonds promptly plunged to a record low of 37 cents on the dollar. Last month, they traded at 56 cents on the dollar.
By Wednesday, Trump’s budget director, Mick Mulvaney, was trying to serve as translator — or medium.
“I wouldn’t take it word for word with that,” Mulvaney said of the Trump remarks. “I think what you heard the president say is that Puerto Rico is going to have to figure out a way to solve its debt problem.”
Puerto Rico was in miserable fiscal shape before Maria’s devastation. This arguably makes the situation more difficult in the short term.
Trump has caused market splashes before. One attack on General Motors before he took office sent the company’s stock price downward for a brief period.
But back in December, as Trump hinted at a trade war with China, the markets generally didn’t take him seriously and since have stayed generally buoyant, for which the president took credit.
Trump vaguely broached the issue on Twitter when the storm’s total devastation became clear: “Much of the Island was destroyed, with billions of dollars owed to Wall Street and the banks, which, sadly, must be dealt with.”
Nobody seems to know for sure if the president has yet examined or discussed financial options for Puerto Rico in any depth.
Facile statements of general intent will have to do for now, as is becoming the norm.