Puerto Rico Will Officially Default on a $422 Million Payment Monday

[Mason66]

Big difference between Puerto Rico and Billy, who has a credit card debt. When Puerto Rico is unable to spend to help its people, unemployment rises, poverty rises, children suffer.. It's a horrible thing, austerity is..

The idea is the same. You said the US is causing suffering because Puerto Rico can't pay back the money.

You are blaming the wrong side.

 

[David_N]

The idea is the same. You said the US is causing suffering because Puerto Rico can't pay back the money.

You are blaming the wrong side.

If you truly want to compare someone with a credit card debt to Puerto Rico, go for it.

 

[natsb]

No, of course not. Puerto Rico is only asking that they be allowed to not pay back all of their debt. The banks will get the bailout.

It is not the banks that will suffer the most if PR does not pay its debts.

"I am worried. Any Puerto Rican is worried," Rey J. de Leon, a 42-year-old lawyer in Puerto Rico told CNNMoney. "We have a lot of people who are seniors and they depend on the returns from those bonds to live on a month-to-month basis."

In total, bond mutual funds hold about $11.3 billion of the island's debt. Another roughly $15 billion is held by hedge funds. The remainder of the debt is held largely by individuals -- mostly Puerto Ricans and mainland Americans.

As we can see, the people that will suffer the most are those everyday people who trusted their life's savings to a Government promise. It is they who own most of the debt, not the banks.

Liberal Governments have a 100% track record of failing when the OPM runs out. Why is this such a hard lesson to learn?

 

[DA60]

Deficits are a great thing.

 

[David_N]

Puerto Ricans leaving island at historic rate - CNN.com

Unemployment, the lack of opportunities, especially for the youth, and quality of life are major factors, he said.

Don't worry guys, employment will magically appear once Austerity takes place, just ask Greece! I can't help but feel bad for Puerto Rico.

Puerto Rico, now 10 years into a recession

This is depressing. Of course, Austerity will magically cure it, right? Just ask Europe. Jesus, it's the same **** over and over..
Puerto Rico suffered from greatly reduced levels of investment/a collapse in construction, and a stagnation in exports. A shrinking population, people unemployed, people afraid to spend, struggling businesses, rising taxes (I believe.) Puerto rico is really in trouble.

 

[natsb]

It will not cost the taxpayer anything. Politicians are stupid.

It must be nice to live in a bubble. The rest of us live in a world of cause and affect.

Most of the people that will be affected are those who depend on the interest earned for month-to-month living. Take away their sustenance money, and who picks up the tap? That's right, the tax payer.

And when they migrate to a US city because they can no longer survive in PR, which they are free to do, who picks up the tab? Yes, you're right again, the tax payer.

As you can see, in the real world, it would cost the tax payer plenty. Nothing occurs in a vacuum.

 

[JANFU]

They literally do not have this ability for some completely inexplicable reason. An exception to Chapter 9 was made for PR and literally no legislative notations exist on it. There was no debate in Congress. There is no legislative record as to why this amendment was inserted. The only thing we know about this change is that Strom Thurmond added the change before the bill went to vote, and Congress voted it into law.


Umm, a government failing to make payments is kind of a big deal.

A month or so ago Congress was contemplating giving PR that ability. But it came down to sending it to committee.
2nd link explains that.
Many are laying sole blame at PR's feet which is crap, lenders were quite happy to lend as noted below in the 1st link.

Puerto Rico's debt woes: Blame this 100-year-old law, and Congress - Fortune

As with any debt crisis, there is plenty of blame to go around. Puerto Rico borrowed too much, sure, but by definition, this means that lenders were too eager to lend to a government whose economy and population have been shrinking for roughly a decade. But eager they were. A 2012 report by the Wall Street Journal describes how, “investors have flocked to its bonds because they have something fund managers crave: They pay high interest rates.”

On top of that, these bonds gave investors an even rarer advantage: a so-called “triple-tax exemption,” because investors don’t have to pay local, state, or federal taxes on income derived from owning Puerto Rican government debt. In other words, the combination of a reach for yield, tax incentives, and the belief that default is impossible all contributed to a debt crisis that is likely not going to end well. If the recent defaults in Argentina and Greece are any guide, it will be average Puerto Rican citizens who suffer the worst consequences, rather than those who borrowed or lent in the run up to this crisis.

But why, exactly, is the Puerto Rican government debt tax exempt?

http://www.nytimes.com/2016/02/03/b...n-bankruptcy-in-puerto-ricos-debt-crisis.html

Puerto Rico officials have been saying that they want to restructure the debt but do not expect to be able to do so without the protection of Chapter 9, the bankruptcy chapter used by insolvent municipalities.

But some legal analysts now say the Territorial Clause of the United States Constitution gives Congress authority to enact laws that would give Puerto Rico the ability to restructure without declaring bankruptcy.

 

[Samhain]

The situation is much more complex than that, but the Puerto Rican government does bear much of the blame of what happened, by raising money through issuing government bonds to predatory hedge funds that were local, state and federally tax free.

That's most of the problem and again, they are to blame for that reckless move.

However... This isn't some... Philosophical or theoretical discussion about deficits, people, human beings, are going to suffer immensely because of this, and Puerto Rico and only Puerto Rico was singled out as the only territory or state that is barred from Chapter 9.

I strongly believe, when your neighbours house is on fire, you don't haggle over the cost of your garden hose.

If I were to guess, they were excluded as leverage to force them to become a state. All territory municipalities are excluded in Chapter 9, not just PR, since they are not municipalities authorized by a State.

 

[Blue_State]

Why do we expect the lenders to be the adults in the room and say no to Puerto Rico when they come asking for money?

 

[Mason66]

If you truly want to compare someone with a credit card debt to Puerto Rico, go for it.

That isn't the point and you know it.

Just own up to your mistake.

 

[David_N]

That isn't the point and you know it.

Just own up to your mistake.

What mistake? Do you think I'm exclusively blaming the United States?

 

[David_N]

Why do we expect the lenders to be the adults in the room and say no to Puerto Rico when they come asking for money?

If the lenders always say no, Puerto Rico will keep on a spiral downward. Expect many people to start coming to the US from Puerto Rico, it's already been happening.

 

[David_N]

Image won't load for me. Anyways, if the government ran a net surplus, we'd all be taking on massive levels of private sect debt. Hell, we already are. Getting back to "good growth" will require private sector debt larger than that of before the recent crisis.

 

[Mason66]

What mistake? Do you think I'm exclusively blaming the United States?

Your mistake was saying the US is causing the suffering for loaning money.

How could you come to a conclusion like that?

 

[Blue_State]

If the lenders always say no, Puerto Rico will keep on a spiral downward. Expect many people to start coming to the US from Puerto Rico, it's already been happening.

Borrow money to pay off a loan...is that what you just recommended?

 

[antiquity]

Puerto Rico Will Officially Default on a $422 Million Payment Monday - Fortune

This is no bueno. I was unaware that our territories did not have the same financial tools as our states. That sounds like an easy fix, but it will not stop the spending. Also, Puerto Rico hasn't released financial statements since fiscal year 2013. They need to get that out so we can see the damage.

Simple solution...give them their freedom to become a 3rd world country. We did it else where like the Philippines and they survived.

 

[Blue_State]

Simple solution...give them their freedom to become a 3rd world country. We did it else where like the Philippines and they survived.

Brutal, but a solution.

 

[antiquity]

Your mistake was saying the US is causing the suffering for loaning money.

How could you come to a conclusion like that?

Puerto Rico has taken the progressive democrats example of a socialism and created a bankrupted welfare state...the same will happen in the mainland if we continue down this current path.

 

[Deuce]

Which they didn't have, for whatever reason. They should have operated within the confines of the system they had rather than blow a fortune on the hopes someone would change the system.



Well, first, do you have documentation that Puerto Rico is singled out? The Chapter 9 laws restrict protection to STATE municipalities, which disqualifies Puerto Rico and all other territories as well.

I have a guess as to why that is. the US territories have their own government and tax system separate from the Federal Tax system, and therefor operate autonomously, and should be expected to handle it's own debt autonomously.

A bankruptcy law update in 1984 had this inserted by Strom Thurmond:
https://www.govtrack.us/congress/bills/98/hr5174/text

" 'State' includes the District of Columbia and Puerto Rico, except for the purpose of defining who may be a debtor under chapter 9 of this title;"

That little insert is what did it.

Strange question and stranger demands. How about you tell me of such cuts... but only those that you didn't get from the internet. :roll:

Not strange. You've been spouting off about reckless spending, how they should have reduced spending, but aren't familiar with the cuts they did make or the costs they were required to bear.

 

[Carjosse]

Simple solution...give them their freedom to become a 3rd world country. We did it else where like the Philippines and they survived.

Except Puerto Ricans are American citizens, they are Americans whether you like it or not.

 

[longview]

Except Puerto Ricans are American citizens, they are Americans whether you like it or not.

Of course this would not happen, but not because of citizenship.
Many US citizens have dual citizenship. I do not see that being a limitation.

 

[Carjosse]

Of course this would not happen, but not because of citizenship.
Many US citizens have dual citizenship. I do not see that being a limitation.

The US government has a duty to serve the citizens of the US, that includes Puerto Rico. You cannot just kick them out.

 

[longview]

The US government has a duty to serve the citizens of the US, that includes Puerto Rico. You cannot just kick them out.

I did not say that! If the territory of Puerto Rico, were granted the freedom to become autonomous,
They could form a new country, the US citizens there would not loose their citizenship,
but would gain dual citizenship to the new country.
Like a child born to US citizens in Canada has dual citizenship.

 

[David_N]

Your mistake was saying the US is causing the suffering for loaning money.

How could you come to a conclusion like that?

I never claimed the US is solely causing for suffering.
We're stupid if we don't do all we can to help them though.

 

[David_N]

Borrow money to pay off a loan...is that what you just recommended?

They're screwed either way, unless we help them with their debt. All of it.