Puerto Rican bonds? Forget about it

An extreme case of black swan working through the debt channel, the hurricanes removed the defaulter from the scene.

After hurricanes,  contracts everywhere get hit with sudden shortages that make more inflation and less real growth.  Lumber will have to be diverted, by price, to the hurricane regions, leaving home builders to turn down high prices. Gasoline is another, we see a sudden shift to support hurricane regions and high prices turned down elsewhere.

But now the contracts backed by a debt instrument cannot meet yield and assets are sold and reused to pay debt.  A series of small shocks will knock off about a half point this and maybe next year.  Three years in a row with sub 2% growth.