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Wall Street in Shock at Trump’s Commitment to ‘Wipe Out’ Puerto Rico Debt

Oct. 4, 2017 (EIRNS)—Today’s New York Times headline summed up Wall Street’s fears: "Trump Vows To Wipe Out Puerto Rico’s Debt. Can He Do That?" Wall Street remembers how Franklin Roosevelt wielded the power of the Presidency over Wall Street, and they are panicked. "Reached late on Tuesday, investors who hold Puerto Rico’s debt and their advisers said they were taken aback and unwilling to comment," the Times reported.

The Times piece marshaled its arguments as to why the President of the United States does not, could not, and had better not have the power to defend American lives at the expense of Wall Street’s debt. They used such legalistic arguments, as that Puerto Rico’s debt is in the form of municipal bonds, which are governed primarily by state laws, not by the federal government; or, yes, the Internal Revenue Service can step in under certain circumstances, "but not simply to ‘wipe out’ the debt."

Bloomberg news service, also, argued that "it is not clear how Puerto Rico’s debt could just be made to disappear outside of bankruptcy court."

The Times, Bloomberg, and other financial media are waving around as a threat, that Trump’s statement on "wiping out" Puerto Rico’s $74 billion in debt will be responsible for blowing out the municipal market generally. But the President simply stated reality. Puerto Rico’s economy has no basis to pay Wall Street’s usurious debts (as most of the other municipalities in the municipal market also cannot pay); the only solution is the Franklin Delano Roosevelt Glass-Steagall reorganization of the system as Lyndon LaRouche has insisted.

Wall Street headlines changed mid-morning on Wednesday, using Office of Management and Budget (OMB) Director Mick Mulvaney’s statements to CBS and CNN to reassure themselves that the White House had "walked back" President Trump’s commitment.

"I wouldn’t take it word for word with that. I talked to the president at length yesterday as we flew home on Air Force One," Mulvaney said. He echoed Wall Street: "Puerto Rico’s going to have to figure out its errors that it’s made for the last generation on its own finances."