http://www.politico.com/story/2016/05/trump-debt-bankruptcy-wall-street-222976 Wall Street: Trump's debt policy smacks of bankruptcy
His vow to 'make a deal' with creditors would undermine U.S. economy, bankers say.
By Ben White
05/10/16 05:15 AM EDT
NEW YORK — Donald Trump has a debt problem.
Twice in the past five days the presumptive Republican nominee has said things about dealing with the $19 trillion federal debt that left Wall Street terrified, Republicans dumbfounded and Democrats licking their chops.
The trouble for Trump began Thursday on CNBC, when he appeared to suggest that as president he would not repay all the U.S. debt owed to creditors. Asked whether the U.S. should repay its debts in full or ask creditors to take less, Trump said: “I would borrow, knowing that if the economy crashed, you could make a deal.”
Financial experts instantly leaped on the comments, suggesting that Trump — who is no stranger to bankruptcy as an executive — would allow the U.S. to default for the first time in its history, an event which could send interest rates soaring and tank the U.S. economy.
Trump went on CNN on Monday morning to clear things up.
Of course he would never allow the U.S. to default. Anyone who suggested such a thing must be “crazy.” What Trump meant to say was that if interest rates rise he would consider buying back existing U.S. debt at a lower prices. As interest rates rise, the price of existing debt goes down.
“In other words, we can buy back debt at a discount. People said I wanted to go and buy debt and default on debt, these people are crazy,” Trump said.
But then he landed himself right back in the soup.
“This is the United States government,” Trump said. “First of all, you never have to default because you print the money, I hate to tell you.”
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http://www.politico.com/story/2016/05/trump-debt-bankruptcy-wall-street-222976#ixzz48Fr3qey5
