You know nothing Maryf rom Georgia your view of PR is a LIE yes there is political corruption and a few government workers may do it but many are caught and punished by Federal or local laws you mention half finished building it's not for laziness of PR workers the owners ran out of money the banks can't lend them more and since people are leaving the island by the thousands there is nobody to buy them.
1
Puerto Rico is now in default. It is in a debt crisis because the government has overspent for years while the island's economy has shrank. Puerto Rico has the same amount of debt that New York State has, but the population of Connecticut.
Regular Puerto Ricans will suffer the most from the default, not Wall Street, because most of the Public Finance Cooperation debt is held by regular people on the island through credit unions. The government is strategically choosing not to pay this debt because these people are less likely to sue.
The Obama administration has no plans to bail out Puerto Rico. They have said so repeatedly. The best hope for Puerto Rico is for Congress to change the law to give the island Chapter 9 bankruptcy rights -- something all 50 states have.
Puerto Rico's default is unlikely to trigger any sort of mass bond sell-off. That said, over 20% of bond funds in the US own at least some Puerto Rican bonds. If the defaults continue, more Americans will be impacted.
Regular Puerto Ricans will suffer the most from the default, not Wall Street, because most of the Public Finance Cooperation debt is held by regular people on the island through credit unions. The government is strategically choosing not to pay this debt because these people are less likely to sue.
The Obama administration has no plans to bail out Puerto Rico. They have said so repeatedly. The best hope for Puerto Rico is for Congress to change the law to give the island Chapter 9 bankruptcy rights -- something all 50 states have.
Puerto Rico's default is unlikely to trigger any sort of mass bond sell-off. That said, over 20% of bond funds in the US own at least some Puerto Rican bonds. If the defaults continue, more Americans will be impacted.
¡Alerta, Cuba, mucho ojo!
Cuba, beware! After 6 decades of failed bans and embargoes you're on top of the game. I hope you've been watching and learning from Puerto Rico's example at this time of rapproachement with your Northern nemesis. Six decades of Puerto Rican= "commonwealth"! Pfft.... All that glitters is not gold.
"Cheap booze is a false economy." ~ CHRISTOPHER HITCHENS
Cuba, beware! After 6 decades of failed bans and embargoes you're on top of the game. I hope you've been watching and learning from Puerto Rico's example at this time of rapproachement with your Northern nemesis. Six decades of Puerto Rican= "commonwealth"! Pfft.... All that glitters is not gold.
"Cheap booze is a false economy." ~ CHRISTOPHER HITCHENS
2
Puerto Rico is about to loose a chunk of its tourist business as nearby Cuba becomes the "go to" place for travelers to the Caribbean. Both Puerto Rico and Cuba are bankrupt but travel writers are pushing Cuba hard as the place to go. Politicians and business people are flocking to Havana looking for new openings, while the same are shunning San Juan.
Ok I am Puertorican have lived all my life in the Island my first job was at 18 when I joined the Army National Guard, never been unemployed since, I retired from the NG in 2009 wont get a pension until 60 and it will not be much I am still working for the NG as a state employee cant retire until I get 61, because of the crisis the local government reformed the retirement system before that I could have retire at 55 after 30 yrs of service with a pension of 65% of my salary which was less than $3,000 a month before deductions they reduced my future pension to just 45% or some $1,250 the notion that puertoricans don't want to work is wrong the problem is that if you get a job with minimum wage you get no help no food stamps no medic aid or even housing subsidies and with higher taxes and ever higher costs of living is better not to work and get social aids, there had been cuts in services, bonuses,State Government jobs are frozen and may be soon more layoff and even reduction in the pensions of all ready retired government employees people are leaving the island by the thousand per month Yes the fault is ours but the U.S. is also guilty they took the rug under our feet when the eliminated section 936 from the tax code and did nothing to replaced with something to keep or economy going we need a little help so we can star to fix the problem, I served in both Gulf wars next year is 100 years since puertoricans are american citizens just like all of you so help please.
5
"...they had investment-grade ratings and paid above-average yields".
At the first hint that PR had financial problems, holders should have unloaded those above average yield (high risk premium) bonds. Otherwise, the holders should just have to take the haircut, if there is one.
As for PR being locked out of the bond market... hardly. There is so much money chasing even small yield premiums, that in a few months or a year people will be snapping up PR bonds full tilt whether there is a default or not. Even without a bailout a haircut is a tax deductible loss which makes the pain a bit less.
At the first hint that PR had financial problems, holders should have unloaded those above average yield (high risk premium) bonds. Otherwise, the holders should just have to take the haircut, if there is one.
As for PR being locked out of the bond market... hardly. There is so much money chasing even small yield premiums, that in a few months or a year people will be snapping up PR bonds full tilt whether there is a default or not. Even without a bailout a haircut is a tax deductible loss which makes the pain a bit less.
Let's look at some real facts on Puerto Rico.
Puerto Rico citizens pay no US income taxes! While they pay SS and Medicare taxes, only their income outside of Puerto Rico is included on their income tax form.
US Medicaid reimbursements are 70% lower. US Advantage Medicare reimbursements are 60% of US rates. Puerto Rico's median income is $19,500, 38.6% of the US's $50,500.
45% of Puerto Rico's population is on Medicaid and 15% is on Medicare. (While the difference in income rates is reflected in the medical provider payment rates, it is obviously not reflected in the income limits on eligibility for Medicaid.) The reality is that Puerto Rico's health care is primarily funded by the US taxpayer!
Puerto Rico is not a state. Their own laws govern bankruptcy and debt. Congress has no role here.
Puerto Rico should be responsible for their own debt and bankruptcy. The US should not be finding their health care.
Puerto Rico citizens pay no US income taxes! While they pay SS and Medicare taxes, only their income outside of Puerto Rico is included on their income tax form.
US Medicaid reimbursements are 70% lower. US Advantage Medicare reimbursements are 60% of US rates. Puerto Rico's median income is $19,500, 38.6% of the US's $50,500.
45% of Puerto Rico's population is on Medicaid and 15% is on Medicare. (While the difference in income rates is reflected in the medical provider payment rates, it is obviously not reflected in the income limits on eligibility for Medicaid.) The reality is that Puerto Rico's health care is primarily funded by the US taxpayer!
Puerto Rico is not a state. Their own laws govern bankruptcy and debt. Congress has no role here.
Puerto Rico should be responsible for their own debt and bankruptcy. The US should not be finding their health care.
One more fact: Puerto Ricans are citizens of the United States and their problems are our problems.
6
You have been misinformed by the New York Times among other news sources about the percentage of Puerto Rico's population on Medicaid. I don't have the figures at my fingertips but the income limit for Medicaid eligibility is extremely low. Puerto Rico keeps it that way because unlike the states, each territory has an annual dollar cap on Federal Medicaid payments. For PR it's something like $360 million now and that covers maybe 20% - 25% of the program's expenses - the territory pays the rest. In New York, the Federal government picks up 53% or more of the state's Medicaid cost and for poorer states like Mississippi, it's more like 75%. If Puerto Rico enrolled more people in the program, it wouldn't get a nickel more in Federal dollars. Instead, it has its own government run program, called Mi Salud, which covers poor people who earn more than the Medicaid threshold amount and retired territorial workers. That program makes up the bulk of the 45% number you cite. The Federal government doesn't contribute to Mi Salud which, unlike Medicaid, allows the flexibility to make the program's enrollees pay some of the expenses.
3
Let's see: $360 M times 4 = $1.44 billion / 3.6 million population = $400. If only 20% of the population is on Medicaid, $400 times 5 is $2,000 per recipient. $2,000/$19,500 median income is 10.3%. 10.3%% of $50.500 US medium income = $5,179. That is the same as or more than the US!
Whatever the right number, the US portion is paid by the US taxpayer and the Puerto Rico tax payer pays none of it!
You may want to check your New York Medicaid figures. My recollection is this: Average US Medicaid expense for an adult is $4,500 and for a child $2,500. Expenses on average are split half and half between the federal and state government. However, in New York state the average Medicaid cost is $17,000 and the federal government pays about 1/3. This is due to high costs in New York state and coverage not included under federal Medicaid reimbursement.
By the way 17.7% of Puerto Rico workers are on disability versus 4.6% in the US. Guess who pays for that!
Whatever the right number, the US portion is paid by the US taxpayer and the Puerto Rico tax payer pays none of it!
You may want to check your New York Medicaid figures. My recollection is this: Average US Medicaid expense for an adult is $4,500 and for a child $2,500. Expenses on average are split half and half between the federal and state government. However, in New York state the average Medicaid cost is $17,000 and the federal government pays about 1/3. This is due to high costs in New York state and coverage not included under federal Medicaid reimbursement.
By the way 17.7% of Puerto Rico workers are on disability versus 4.6% in the US. Guess who pays for that!
After most of Puerto Rico's debt is owned by so-called "vulture" hedge funds, the managers of those funds -- most of whom are campaign-giving Republicans -- will get Congress to pass a law authorizing an orderly restructuring of the island's debt. Puerto Rico's only realistic long-term plan is to enhance its status as a vacation and retirement destination. It's sad, but there's little if any prospect that industry will return because there are less costly labor options in other countries. Puerto Rico is the poster child for the declining future of American industry.
5
Wrong wrong wrong. More than half of the $72bn is held by individuals (mainland and on island). The rest is split between mutual funds and the hedgies. Exact numbers are impossible to find. If/when bonds default, it will cause very significant financial pain on individuals. It isn't as simple as just letting the hedge funds take a hit.
4
http://hedgeclippers.org/hedgepapers-no-17-hedge-fund-billionaires-in-pu... In this article you will know who owns the debt and the "vulture"hedge fonds
1
PR must not become a state, must not be forgiven for their debt. Restructure perhaps, but like Greece, most of the island is on the government dole and too many 'work' (not) for the government. Corruption is rampant at every level. Go there - see the half built buildings, the lack of workers doing anything. It's a joke and has only survived this long due to tourism. Crime is high, education is appalling. But all the gov't employees are protected for their corruption by the gov't employees over them. It is appalling.
Many here act like the US has caused this situation. Are you kidding me?!! PR caused it's own problems through lazy corruption at its worst. Until the people of PR demand government turnover, they will all suffer. But that won't happen as those living off gov't handouts outnumber workers.
NO TO STATEHOOD, NO TO BAILOUTS.
Many here act like the US has caused this situation. Are you kidding me?!! PR caused it's own problems through lazy corruption at its worst. Until the people of PR demand government turnover, they will all suffer. But that won't happen as those living off gov't handouts outnumber workers.
NO TO STATEHOOD, NO TO BAILOUTS.
2
You have no knowledge of PR, Singapore came to see the island so prosperous it's economy was in the 80's. In order to aspire to statehood the US told PR to remove the 936 law that encouraged manufacturing with low taxation and then was the beginning of the fall. Shame on your words, we are US citizens, working, dying in wars and now even Medicare that they pay like you they want to reduce.
2
You Confederate looser we don't need bail out just the means to restructuring our debts without taking food from people's plates and sending 70 yrs old people to look for a job because we will have to cut their pensions and if we water to be a State is our right as American Citizens since 1916 and I served in both Gulf Wars with pride. and you?
1
When Citibank and JC Morgan Trust faced a financial crisis in 2008 they were bailed out by the US government. If Congress had not passed an almost "no strings attached" bailout loan they simply would have filed for bankruptcy and as in any bankruptcy creditors, in that case investors would have taken a loss. The investors were overwhelmingly hedge funds and billionaires. The average account holder like you and me were insured and would have been unaffected. The actual human impact of bankruptcy would have been almost unnoticeable.
In contrast, Puerto Rico faces a human crisis where nearly all its three million residents will be harmed if Congress does not act. Medical services will be cut. Schools closed, critical municipal services halted. When we bailed out the banks we were told this was no time for finger pointing, the fiscal stability of the banking system--meaning the wealthy investors was at stake.
So why not a similar bailout for 3 million American citizens who live in Puerto Rico? You cannot tax or restructure government in PR any more than it already has been. Simply put, the bonds cannot be paid in full in the time frame in which they were issued. So yes, Puerto Rico is too big to fail and its future is more important than the investment portfolios of hedge fund billionaires. It's time we acted for human need rather than human greed. Congress should act now and restructure Puerto Rico's debt.
In contrast, Puerto Rico faces a human crisis where nearly all its three million residents will be harmed if Congress does not act. Medical services will be cut. Schools closed, critical municipal services halted. When we bailed out the banks we were told this was no time for finger pointing, the fiscal stability of the banking system--meaning the wealthy investors was at stake.
So why not a similar bailout for 3 million American citizens who live in Puerto Rico? You cannot tax or restructure government in PR any more than it already has been. Simply put, the bonds cannot be paid in full in the time frame in which they were issued. So yes, Puerto Rico is too big to fail and its future is more important than the investment portfolios of hedge fund billionaires. It's time we acted for human need rather than human greed. Congress should act now and restructure Puerto Rico's debt.
10
No. The government of PR is so corrupt, engaging in extortion and bribery as if that is just the way business is done, they should never get bailed out or forgiven. They are Greece.
5
Sorry Mary, when it comes to corruption no one beats the financial giants of the good old USA. Ask the home owners who qualified for fixed rate mortgages but instead were pushed into risky adjustable rate plans. Or the mortgage divisions that knew they were selling junk investments but advertised them as AAA. How about the fact that if you or I made a bad investment we'd loose money and think twice next time. The banks knew they were buying and selling junk, but they also knew that they had the clout to get you and I to bail them out when the bubble burst.
And speaking of corruption, how about the fact that investors have collected billions from the banks in civil fraud cases yet not a single executive has been prosecuted for criminal fraud. Try that with a credit card company and see what would happen.
We've all been sold a bill of goods about being responsible, playing by he rules and obeying the law. The only problems is while those rules apply to you and I the fat cats play an entirely different game, one where they make up the rules or buy politicians to do it for them.
The people of Puerto Rico are no more responsible for this corrupt system than you or I are. Some of their bonds were bought by future capitalists who really want to force PR to sell it's public facilities and fire sale rates. This is corruption plain and simple. No citizen should suffer because of the greed and avarice of the big corporate boys.
And speaking of corruption, how about the fact that investors have collected billions from the banks in civil fraud cases yet not a single executive has been prosecuted for criminal fraud. Try that with a credit card company and see what would happen.
We've all been sold a bill of goods about being responsible, playing by he rules and obeying the law. The only problems is while those rules apply to you and I the fat cats play an entirely different game, one where they make up the rules or buy politicians to do it for them.
The people of Puerto Rico are no more responsible for this corrupt system than you or I are. Some of their bonds were bought by future capitalists who really want to force PR to sell it's public facilities and fire sale rates. This is corruption plain and simple. No citizen should suffer because of the greed and avarice of the big corporate boys.
5
No more "mantengo" (welfare)! Puerto Rico has lived from "bailout" to "bailout" its entire history, from the lap of Mother Spain to the hand of Uncle Sam. THAT is the problem!
Puerto Rico's dire situation is the result of their historic dependance and lack of courage and determination to BE.
I suggest a Cuban style embargo to get things to improve.
And I am Puerto Rican, fortunate to live in Canada – away from entanglements, out of Puerto Rico, out of the USA!
"Exile is my power."
~ GOLSHIFTEH FARAHANI
( b. 1983)
Iranian actress, musician and singer currently living in Paris.
Puerto Rico's dire situation is the result of their historic dependance and lack of courage and determination to BE.
I suggest a Cuban style embargo to get things to improve.
And I am Puerto Rican, fortunate to live in Canada – away from entanglements, out of Puerto Rico, out of the USA!
"Exile is my power."
~ GOLSHIFTEH FARAHANI
( b. 1983)
Iranian actress, musician and singer currently living in Paris.
1
Google or Microsoft or Facebook should just BUY Puerto Rico...
It be kinda cool for liberals to see what it could be lie if a corporation truly owned a Nation....
It be kinda cool for liberals to see what it could be lie if a corporation truly owned a Nation....
Proof that everything under the Stars and Stripes ain't better.
The Commonwealth of Puerto Rico (Spanish: Estado Libre Asociado de Puerto Rico, literally the "Free Associated State of Puerto Rico") was established in 1952. The Castro revolution against the Batista regime came to fruition in 1959.
In those same 5 - 6 decades Cuba has fared better under Castro than Puerto Rico under the U.S.
The Commonwealth of Puerto Rico (Spanish: Estado Libre Asociado de Puerto Rico, literally the "Free Associated State of Puerto Rico") was established in 1952. The Castro revolution against the Batista regime came to fruition in 1959.
In those same 5 - 6 decades Cuba has fared better under Castro than Puerto Rico under the U.S.
5
That's not true. Cuba has been isolated for years and the numbers manipulated. On paper puerto rico looks terrible but their infrastructure rivals the mainland. I've been there on various occasions and the quality of their roads amazes me. I feel that this may be part of the shock doctrine that Klein describes and I won't be shocked if the next step is to run out the poor and begin gentrification.
3
@ Muriel
• Cuba has been isolated for years and the numbers manipulated. On paper puerto rico [sic] looks terrible but their infrastructure rivals the mainland.
Where have you been these past 6 decades, Muriel?
The U.S has isolated itself from Cuba.
Puerto Rico's "infrastructure", economy and healthcare and education systems are a disaster and water is being rationed in San Juan. The Autoridad de Acueductos y Alcantarillados responsible for water and drainage is bankrupt. Crime is at an all-time high. Old San Juan is a mini-police state armed to protect whatever tourists and debt-ridden local upper classes venture in.
Hotels are unsustainable and change hands as often as I change underwear.
Ave. Ponce de León, once a booming commercial strip, is in visual collapse from Santurce to Rio Piedras.
When was the last time you visited Puerto Rico? Cuba?
I am Puerto Rican and last visited Cuba in March.
Re-read this article, then yesterday's "Puerto Ricans Brace for Crisis in Health Care", then do a NYTimes search on Puerto Rico and read all relevant articles over the past 12 months. Then do the same for Cuba, starting with yesterday's Times editorial: "Growing Momentum to Repeal Cuban Embargo".
You've called me a liar, the last desperate response from someone without valid argument to stand on.
"The most dangerous worldview is the worldview of those who have not viewed the world.”
~ ALEXANDER VON HUMBOLDT
(1769 – 1859)
Prussian geographer, naturalist and explorer
• Cuba has been isolated for years and the numbers manipulated. On paper puerto rico [sic] looks terrible but their infrastructure rivals the mainland.
Where have you been these past 6 decades, Muriel?
The U.S has isolated itself from Cuba.
Puerto Rico's "infrastructure", economy and healthcare and education systems are a disaster and water is being rationed in San Juan. The Autoridad de Acueductos y Alcantarillados responsible for water and drainage is bankrupt. Crime is at an all-time high. Old San Juan is a mini-police state armed to protect whatever tourists and debt-ridden local upper classes venture in.
Hotels are unsustainable and change hands as often as I change underwear.
Ave. Ponce de León, once a booming commercial strip, is in visual collapse from Santurce to Rio Piedras.
When was the last time you visited Puerto Rico? Cuba?
I am Puerto Rican and last visited Cuba in March.
Re-read this article, then yesterday's "Puerto Ricans Brace for Crisis in Health Care", then do a NYTimes search on Puerto Rico and read all relevant articles over the past 12 months. Then do the same for Cuba, starting with yesterday's Times editorial: "Growing Momentum to Repeal Cuban Embargo".
You've called me a liar, the last desperate response from someone without valid argument to stand on.
"The most dangerous worldview is the worldview of those who have not viewed the world.”
~ ALEXANDER VON HUMBOLDT
(1769 – 1859)
Prussian geographer, naturalist and explorer
4
PS @ Muriel
• ..On paper puerto rico [sic] looks terrible but their infrastructure rivals the mainland.
You mean like this?
NEW YORK TODAY: SINKING IN
By Tatiana Schlossberg
THE NEW YORK TIMES: August 5, 2015 6:10 am
http://graphics8.nytimes.com/images/2015/08/05/nyregion/newyorktoday/05n...
Watch your step. Credit Ángel Franco/The New York Times
• ..On paper puerto rico [sic] looks terrible but their infrastructure rivals the mainland.
You mean like this?
NEW YORK TODAY: SINKING IN
By Tatiana Schlossberg
THE NEW YORK TIMES: August 5, 2015 6:10 am
http://graphics8.nytimes.com/images/2015/08/05/nyregion/newyorktoday/05n...
Watch your step. Credit Ángel Franco/The New York Times
I have never been able to understand why there is so much hatred and discrimination against Puerto Ricans in every way from everyone, mostly from Latin Americans with a worse standard of living that move to the US and resent not having American citizenship. The vitriolic and ignorant comments from readers of a newspaper that is supposed to be well-educated is incomprehensible.
Puerto Rico had an economic boom during the years that manufacturing took advantage of tax incentives. When the incentives expired, Puerto Rico was abandoned. The same happened in northern states in the US. Now cities in the US are abandoned and in ruins. Detroit is an example. Therefore, Puerto Rico has had to struggle to maintain a standard of living it got used to during economic boom periods.
Puerto Rico had an economic boom during the years that manufacturing took advantage of tax incentives. When the incentives expired, Puerto Rico was abandoned. The same happened in northern states in the US. Now cities in the US are abandoned and in ruins. Detroit is an example. Therefore, Puerto Rico has had to struggle to maintain a standard of living it got used to during economic boom periods.
9
Like Ireland and Greece this is easily explained as yet another case of bond holders buying bonds from a risky borrower whom they expected would be bailed out. The Irish banks bailed out by the Irish Government and taxpayers and Greece by the Germans and EU.
PR might need to push the VAT implementation date up to this year.
PR might need to push the VAT implementation date up to this year.
2
"Mutual funds bought them because when first issued they had investment-grade ratings and paid above-average yields." And Broker-Dealer "Salesman", traveling under titles like "Adviser", sold their retail customers these Mutual Funds (which generated a big Sales Commission) without having to disclose they owed the customer no Fiduciary Duty to put the customers Best Interests first.
2
Puerto Rico is poor and dysfunctional in part because it does not have a working educational system educating in English. Hawaii, for all of its bloated state government and remote location, is much richer, in part because it does speak English and can more readily take advantage of economic opportunities coming from the English-speaking US mainland.
The federal government assume 20% of Puerto Rico's debt in return for creditors waiving 20% of it and Puerto Rico agreeing to educate children in English and transition to be primarily English-speaking over the next 15 years. Puerto Rico's debt per person is lower than that of the US, and Puerto Ricans don't pay federal income tax, so if Puerto Rican productivity came closer to that of the mainland, paying 60% of the current outstanding debt would be a simple matter. This would be a win-win-win deal. The federal government would have to provide fewer subsidies for a less impoverished Puerto Rico. The creditors would get 80 cents on the dollar, more than their bonds are now worth, and Puerto Rico would have a larger economy and very manageable debt.
The federal government assume 20% of Puerto Rico's debt in return for creditors waiving 20% of it and Puerto Rico agreeing to educate children in English and transition to be primarily English-speaking over the next 15 years. Puerto Rico's debt per person is lower than that of the US, and Puerto Ricans don't pay federal income tax, so if Puerto Rican productivity came closer to that of the mainland, paying 60% of the current outstanding debt would be a simple matter. This would be a win-win-win deal. The federal government would have to provide fewer subsidies for a less impoverished Puerto Rico. The creditors would get 80 cents on the dollar, more than their bonds are now worth, and Puerto Rico would have a larger economy and very manageable debt.
3
I started to study English in PR when I was 6, when I was 14 French. When you speak Spanish you understand Italian and Portuguese, so I speak 5 languages pretty well. Oh! I forgot I studied Urdu and other languages you might not identify.
1
Puerto Rico is the political equivalent of AIG: U.S problem created by lax oversight and sleepy regulation, and now with her impending fiscal failure, for the U.S. to crisis-manage i.e. bailout. The first step should be to speed-up the referendum towards statehood, which a majority of Puerto Ricans support. And then, similar to bailing out AIG, crank the printing presses to full gear and hand PR the 80b or so she needs to get back on her feet.
The U.S. gives a lot of free patronizing advice to the Germans on Greece, how about walking the talk? PR is more important than Iran and Cuba, legally and morally. It's high time Washington acted, and fast.
The U.S. gives a lot of free patronizing advice to the Germans on Greece, how about walking the talk? PR is more important than Iran and Cuba, legally and morally. It's high time Washington acted, and fast.
16
TMK,
Clearly, you're getting your apples and oranges mixed up for a bad concoction of fruit salad in comparing Puerto Rico with AIG. Here's a brief primer. AIG faced a liquidity crunch for it had recklessly insured so-called AAA-rated mortgages (see CDO and CDS) of banks that also equally recklessly gave home mortgages, like Halloween candy, to any soul who happened to demonstrate (s)he had a functioning pulse. So when the banks couldn't sell those mortgages packaged as debts in the secondary market, AIG, according to contract, had to pay their insurance collateral. When AIG failed -- just like a sudden run on banks during the Great Depression -- to meet its obligations, it faced bankruptcy and the federal government had to step in with a lifeline -- not a bailout, as you incorrectly state -- because it'd have further exacerbated the global economic crisis. What AIG received was a loan at a steep price -- it was 80% owned by taxpayers like you and me, and shareholders like you and me who had our 401K investments in mutual funds also got wiped out on our AIG stake in, say the Vanguard 500 Index Fund. To AIG's credit, it paid taxpayers back every last penny in advance of the deadline in 2013, and taxpayers made a tidy profit of $22 billion on the government's assistance package. Puerto Rico has been drawing sustenance for ever from the public assistance trough, and its denizens living a merry life on government doles. Now, the time has come to pay the bondholder pipers back.
Clearly, you're getting your apples and oranges mixed up for a bad concoction of fruit salad in comparing Puerto Rico with AIG. Here's a brief primer. AIG faced a liquidity crunch for it had recklessly insured so-called AAA-rated mortgages (see CDO and CDS) of banks that also equally recklessly gave home mortgages, like Halloween candy, to any soul who happened to demonstrate (s)he had a functioning pulse. So when the banks couldn't sell those mortgages packaged as debts in the secondary market, AIG, according to contract, had to pay their insurance collateral. When AIG failed -- just like a sudden run on banks during the Great Depression -- to meet its obligations, it faced bankruptcy and the federal government had to step in with a lifeline -- not a bailout, as you incorrectly state -- because it'd have further exacerbated the global economic crisis. What AIG received was a loan at a steep price -- it was 80% owned by taxpayers like you and me, and shareholders like you and me who had our 401K investments in mutual funds also got wiped out on our AIG stake in, say the Vanguard 500 Index Fund. To AIG's credit, it paid taxpayers back every last penny in advance of the deadline in 2013, and taxpayers made a tidy profit of $22 billion on the government's assistance package. Puerto Rico has been drawing sustenance for ever from the public assistance trough, and its denizens living a merry life on government doles. Now, the time has come to pay the bondholder pipers back.
3
Err...nice story if it were true. The AIG bailout has been ruled illegal by the courts. Maurice Greenberg wants that "tidy profit" in his pocket with interest, rightly so in my opinion. Whether he succeeds or not, the court has already established that those profits were tainted. I got no taxpayer pride on this one, it was a government mess from start and could get worse if/when damages awarded.
Call it a loan if you like but PR is also a U.S. mess, they are obliged to step in and set matters right. If AIG can get rewarded for reckless behavior so can Puerto Rico. And who knows, Puerto Rico might actually pay back with good money, something AIG is yet to do.
Call it a loan if you like but PR is also a U.S. mess, they are obliged to step in and set matters right. If AIG can get rewarded for reckless behavior so can Puerto Rico. And who knows, Puerto Rico might actually pay back with good money, something AIG is yet to do.
3
You don't seem to understand anything about PR. It is corrupt to the core. Fees and bribery are rampant. Over half of the buildings started have been left half finished and lay across the island. Government employees are bloated, don't work, and all extort money from businesses. The people don't even pay Federal taxes. NO TO BAILING OUT PR AND NO TO STATEHOOD. Leave them to fix their own mess.
1
Wait until the Cubans comes on line...they are hardworking and innovative enough to live on 35 bucks a month. Puerto Rico either needs to clean up the corrupt act that is the government, or kiss their tourism goodbye.
13
Yes, darling. But Cuba is not a capitalist state, it is socialist, which means that the government pays for basic needs. Puerto Ricans have to pay for everything more than in the mainland US. Food, cars, utilities, housing, etc. cost more dollars than in the mainland. This is something that Americans in the US are not aware of. Everything has to be imported from the mainland in American ships. It is an island much smaller than Cuba and it does not has the resources or land to sustain the population of 3.5 million. And Puerto Ricans cannot walk around shoeless as the Cubans do in their island with old cars and decaying buildings. It has to maintain a standard of living comparable to the mainland as a US territory on very low salaries.
5
@ DS
Cuba IS on line and their tourism is booming (without the USA). They have more visitors than they can house and the Cuban hospitality and construction industries can hardly keep pace with the boom.
Nothing is booming in Puerto Rico these days except drugs and crime. They call it "the American dream". I call it a nightmare without awakening.
Check it out, DS, when you're finally allowed to travel to "the forbidden island".
Cuba IS on line and their tourism is booming (without the USA). They have more visitors than they can house and the Cuban hospitality and construction industries can hardly keep pace with the boom.
Nothing is booming in Puerto Rico these days except drugs and crime. They call it "the American dream". I call it a nightmare without awakening.
Check it out, DS, when you're finally allowed to travel to "the forbidden island".
1
Robert, Puerto Rico only has the drug and crime problem the US has. Pretty soon it will happen in Cuba as well where before Castro took over corruption and the mafia was booming. Moreover, Puerto Rico does not have a tradition of tourism. And Puerto Rico has always been loyal as American citizens fighting and dying for this country. And now that it has problems as a very small island, much smaller than Cuba, who sided with Russia before it was abandoned by them, you all want to trash it as traitors.
I have long advocated that Puerto Rico must decide to become a state or an independent country (my preference would be the latter). Its present status as a commonwealth is unsustainable.
It is also a prime example of how terribly noxious our dependency policy is (another fine example is of course how we treat American Indians). This dependency removes all incentives the people affected have to integrate with society as a whole, earn a living, join the work force & stop living off the big teat of government handouts!
It is also a prime example of how terribly noxious our dependency policy is (another fine example is of course how we treat American Indians). This dependency removes all incentives the people affected have to integrate with society as a whole, earn a living, join the work force & stop living off the big teat of government handouts!
15
But AIG, Lehman Brothers, Wall Street firms, state of Louisiana also went bankrupt and they DON'T have "special status" like Puerto Rico. It's just lack of due diligence.
1
Although you've attempted to disguise your comment as intellectual and objective, it is neither. The underlining meaning in your comment is that people on this island are somehow lazy and refuse to work, similar to the American Indian, whom are very hard working people. I suggest you read a bit more, travel, open your mind to other cultures and possibly learn something new.
8
The State of Louisiana has never declared bankruptcy. In fact it would not be allowed to do so under federal bankruptcy law.
2
Here's an easy solution: per reports, a significant percentage of PR debt is owned by residents of PR. If they want so badly to default, let them default on the claims of their internal creditors only. If you're gonna cook it, you gotta eat it...
4
What's this? Big Government Liberalism bankrupt? Again?? Where are the libs telling Puerto Ricans that the sure fire way out of debt is for Big Government to borrow, spend, borrow, spend, borrow and spend? Where are the leftists citing this as proof that the Puerto Rican government is too small and doesn't spend enough?
9
Pop quiz, Larry, name all the successful small-or-no-government libertarian countries on Earth that are in the Top 20 economies. Now name the successful big government liberal countries on the same list. Lousy facts, always ruining things for you guys.
2
Puerto Rico has voted to not become a state, right? They do not have to pay income taxes by not being a state, right? Puerto Rico borrowed and spent the money owed, right? Who will loan money to Puerto Rico in the future?
As far as that goes it looks like many of these supposedly very safe governmental bonds are going to go upside down, then what?
As far as that goes it looks like many of these supposedly very safe governmental bonds are going to go upside down, then what?
9
The economy of Puerto Rico has been in a free fall ever since the U.S. Congress decided to roll back the Section 936 tax incentives. Those incentives were the lifeblood of our industrial sector, and when they were rolled back from 1996 to 2006, the collapse started then. The cheapest and most effective way that the U.S. could put Puerto Rico back on the road to growth and sustainability is to restore those important Federal tax exemptions. I posted a petition on WhiteHouse to this effect. If you could please let this past the spam filter, it can be found at https://petitions.whitehouse.gov//petition/advocate-restoring-section-93.... Please sign and share.
8
Thank you for the link I will share with others.
1
The answer to Puerto Rico's problems is not corporate welfare. Those tax incentives allowed mainland manufacturing firms to avoid their US taxes by moving factories to Puerto Rico. Congress rightfully removed this subsidy.
2
Puerto Rico is the canary in the coal mine when it comes to Government handouts since 60% of the island is either on Medicare or Medicaid. Add in Welfare and Disability and you have the full buffet of budget busting benefits.
So when politicians like Obama and his ilk want to expand "the safety net" they should look at Puerto Rico to see what the consequences are of handing out freebies to the takers of society. Eventually the "net" become a web, entrapping taxpayers for ever increasing amounts of money.
So when politicians like Obama and his ilk want to expand "the safety net" they should look at Puerto Rico to see what the consequences are of handing out freebies to the takers of society. Eventually the "net" become a web, entrapping taxpayers for ever increasing amounts of money.
12
Absolutely. I'd much rather those desperate people have to turn to crime so we can all live equally in fear. It's the Conservative Way.
6
Mr. Smith, while we may not pay Federal income taxes, we certainly pay Social Security and Medicare, plus unemployment taxes, as well as income taxes to Puerto Rico. We have a very highly educated work force with one of the best engineering schools in the country located in Mayaguez...just ask NASA who comes down here every year to get our brightest and best. Most people commenting here have no idea of what really is happening down here. We are U.S. citizens, we pay taxes, we fight your wars....and we need help to get back on our feet. And, yes, a total shakeup of the government is in order...but stop with this "takers" of society talk. It is not productive.
13
Here, here to SC in Rincon. These are our fellow US citizens. There problems are our problems.
2
All debt should have a 'cultural desire to pay back point system'. Some Countries have no shame in defaulting (Latin America) while others will do whatever it takes to pay debt (Asia) rather than default.
5
That's a stereotypical statement inherently racist. There is something called facts that are politically and economically motivated.
4
I do not condone the poor decisions that have led to this crisis in Puerto Rico, but as someone born there, I want to add to the reporting on the situation that all should remember that all Puerto Rincans are U.S. Citizens with all the rights of all such citizens except for representation in Congress, and that Puerto Ricans have traditionally joined the armed forces at a rate disproportionate to its population by far. Puert Ricans are not some outsiders, they are part of us here in America, some have died for us, and many are very poor. there seems to be more interest in helping Cuba than in helping Puert Rico.
18
in Puerto Rico there certainly is no interest in helping Puerto Rico
4
PR doesn't have the options that a U.S. state would have and doesn't have the options that a sovereign state would have. "Mistress" status has benefits but is fraught with danger. The wealthy other women in PR that have consistently voted against sovereignty are aging. Meeting secretly in hotel rooms with the U.S. dollar is not a long-term strategy.
5
I have never been to Puerto Rico, but I wish it was a State. It seems like it could become another Hawaii for those on the East coast, beautiful beaches, multiple islands, not too crowded, and within reach. Is it really fair to keep it in the purgatory status of not quite a State? It's too important to us.
3
They don't want to become a state, because then everyone there would have to pay Federal income taxes.
However, if things go on the way they are, no one will have enough income to pay tax, and then they might agree to it!
However, if things go on the way they are, no one will have enough income to pay tax, and then they might agree to it!
4
...But they voted to become a state... Not to mention so many younger Puerto Ricans, the one's who are of working age and would pay income taxes, have left the island for the mainland to find work.
3
I have been to both places. PR is NOT (and never will be) Hawaii.
5
Puerto Rico is that boyfriend/girlfriend that lives with you, does not work, goes out to party without you, and eats the last piece of pizza and drinks the last beer.
Take, take, take, and not once put in their half of the bargain, and denies you access to a part of the flat which you are paying for (Viequez).
Once again, give them what they demand: Independence.
Take, take, take, and not once put in their half of the bargain, and denies you access to a part of the flat which you are paying for (Viequez).
Once again, give them what they demand: Independence.
17
Also, to Hawaii, California, Illinois, and New York State, too.
One benefit: At least we won't be hearing so much about those feckless Greeks and their foolish IMF overlords, not now that we have a similar drama going on with PR and its Congressional co-conspirators.
1
One third of Puerto Rico is on fed. funded food stamps. Their is no way of knowing where the money went, since it's unaccounted for.
9
They spend it on food, Jim. That is what you do when you live in deep poverty.
3
"But as investors have prepared for the default, they learned that the bonds’ prospectus does not describe this safety feature the same way the bonds’ indenture does, leaving confusion about what it takes to activate the letter of credit, or whether the guarantee is meaningful at all."
In that case, was the prospectus fraudulent? The SEC should look at this. This is a criminal, not a civil, matter.
In that case, was the prospectus fraudulent? The SEC should look at this. This is a criminal, not a civil, matter.
9
This is just the beginning. The worst is yet to come...
13
A scandal that hasn't gotten any publicity in the U.S. is how public school administrators in Puerto Rico have defrauded Puerto Rican students, crippling the future of the commonwealth, by providing a truly terrible education, as measured by Puerto Rico's horrible NAEP and PISA test scores, while lining their own pockets by spending more per pupil on certain sketchy administrative categories than any of the 50 states:
http://www.unz.com/isteve/the-amazingly-horrible-test-scores-of-students...
http://www.unz.com/isteve/the-amazingly-horrible-test-scores-of-students...
16
You mean, just like public union teachers do in the rest of the US? Shocked I tell you! SHOCKED!
7
No, Puerto Rico's public school teachers cost less per student than the teachers in any of the 50 states. But Puerto Rico's school administrators spend more per student in the shifty-sounding subcategories of General Administration ($699 per student per year in PR vs. $212 in America) and Other Support Services ($644 vs. $347) than in any of the 50 states.
The results are dismaying: A stratified sample of Puerto Rican public and private students scored on the 2012 international PISA exam at a Third World level, worse in math than even Jordan:
http://www.unz.com/isteve/uncovered-puerto-ricos-pisa-scores/
This financial crisis ought to provide an opportunity to shine a light on the governmental corruption and apathy that has long undermined the potential of Puerto Rican youths.
The results are dismaying: A stratified sample of Puerto Rican public and private students scored on the 2012 international PISA exam at a Third World level, worse in math than even Jordan:
http://www.unz.com/isteve/uncovered-puerto-ricos-pisa-scores/
This financial crisis ought to provide an opportunity to shine a light on the governmental corruption and apathy that has long undermined the potential of Puerto Rican youths.
7