White House Budget Director Mick Mulvaney had some quick work to do to cover for Donald Trump's suggestion Tuesday that Puerto Rico's debt should be "wiped out." Bloomberg writes:
"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,” Mick Mulvaney, director of the White House budget office, said in an interview Wednesday.
That's not what Trump said and it's not what the markets heard him say.
— AP Business News (@APBusiness) October 4, 2017
That drop put Puerto Rico's bonds at a record low. Trump's comments also sent Puerto Rico's bonds due in 2035 tumbling.
… a benchmark general-obligation bond due in 2035 plunged 12 cents on the dollar Wednesday morning. The price later rebounded.
That's because what Trump said was actually quite clear.
“We are going to work something out” on Puerto Rico’s debt, Trump said.
“We have to look at their whole debt structure,” Trump said. “They owe a lot of money to your friends on Wall Street. We’re going to have to wipe that out. That’s going to have to be -- you know, 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.”
On Wednesday, Mulvaney said the White House was putting together an aid package for Puerto Rico for congressional approval.
The U.S. territory has been defaulting on its debts for a couple years as officials sought to avoid making budget cuts that would have devastated the island’s economy. But Puerto Rico's governor wasn't any more keen on Trump's comments than Mulvaney was.
At a press conference in San Juan on Wednesday, Governor Ricardo Rossello dismissed Trump’s remarks and said Puerto Rico will resolve its debt through the bankruptcy process.
“As far as the comments made about wiping the debt clean, that is the opinion of the president. Puerto Rico is already involved on a judicial front,” he said.
Wow. Puerto Rico really got the Trump touch—killing its bonds and delivering a performance during his visit that played more like a martian bringing greetings from a far away land than a president offering residents comfort and hope.