Economy Puerto Rico in Bankruptcy: Oversight Board Proposes To Screw Bondholders In Favor of Pensioners

[Amerikuracana]

FREE STUFF FOR EVERYONE!

Naw.. Not everyone.

 

[Gregolian]

Can they include in there that my student loan debt is forgiven?

 

[JadeOwl]

It's universally acknowledged that Puerto Rico was fucked because the incompetent Puerto Rican government failed to do anything meaningful to diversify their economy back when their coffers was flushed with money, such as transitioning that beautiful island from a factory to a regional tourism powerhouse that it should be before the Federal tax incentives expires as expected, the big manufacturers pulled out as expected, and all the now-unemployed young people have no choice but to flee to the main land to find work, also as expected. Then years later Puerto Rico declared bankruptcy, as expected.

None of that came as a surprise for anyone. They all happened gradually and expectedly, like an extremely slow-moving trainwreck. Some would say that the Puerto Rican government did nothing was expected as well.

For decades now, the Puerto Rican people are perfectly okay with continuing their proud tradition of electing politicians that had zero plans for their future and did absolutely nothing to improve the situation besides keeps kicking the can down the road and making themselves rich by borrowing more and more money than ever before from bond investors on Wall Street to fill their budget each year, the same investors now being villified by Senators Warren and Sanders as "vultures".

All this talk about Puerto Rico debts rarely include a plan to actually fix the underlying problems that drove them to the cliff, even though everyone knows what the problems were, for it's so much easier to blame it on anyone else but those who are responsible for their own demise.

And I guess the Jones Act didn't have anything to do with the problem right?

Let's just not act like the whole of the problem is the Puerto Ricans' fault.

 

[Cubo de Sangre]

Pretty much.

But that will simply be solved by people leaving for the mainland.

I guess we're gonna need a bigger moat.

 

[Arkain2K]

What do you want to do? A Stalinist purge?

Puerto Ricans cannot govern themselves effectively, and the people there have long considers institutionalized corruption on the island to be a fact of life, this is undisputable.

No amount of money throwing their way will suddenly help Puerto Rican politicians become competent, this is also undisputed.

When children cannot do something alone and call for help, the adults should help.

Before we attempt your idea of a Stalinist Purge, I propose that we officially annex Puerto Rico into Florida, where most of the young Puerto Ricans have already migrated to years ago.

We love to poke fun at Florida, but Tourism is something they excels at, and I believe Tourism is Puerto Rico's most effective fishing rod, especially when paired with the enormous fleet of international cruise ships docking in Florida.

 

[Jack V Savage]

FREE STUFF FOR EVERYONE!

The alternative to this is free stuff for a different group of people. PR bonds paid very high interest rates as a result of the high perceived risk. Companies that invested in PR debt did very well as a result, but now people want to say that they shouldn't be allowed to default, and thus that the gov't should ensure high risk-free returns to some investors. Fuck that shit.

 

[Liquid Smoke]

LMAO Goofy Liz doesn't know that Puerto Ricans who live on the island can't vote!

 

[Jack V Savage]

LMAO Goofy Liz doesn't know that Puerto Ricans who live on the island can't vote!

Amazingly, some legislators actually try to do their jobs well.

 

[Kindacrazy]

The alternative to this is free stuff for a different group of people. PR bonds paid very high interest rates as a result of the high perceived risk. Companies that invested in PR debt did very well as a result, but now people want to say that they shouldn't be allowed to default, and thus that the gov't should ensure high risk-free returns to some investors. Fuck that shit.

Is there something currently preventing Puerto Rico from declaring bankruptcy? I agree that would be absurd and make am mockery of the system.

 

[Rod1]

And then what? Let's say the "capitalist pigs" have their Billions in investment wiped out at a stroke of a pen, Puerto Rico get a fresh start with zero debt, with the same corrupted and incompetent Puerto Rican politicians they freely votes for at the helm, leading an island full of pensioners into the future.

How long do you think until the cycle starts all over again? Next Monday or Tuesday?

You talk as if politicians campaigned on a corruption platform and that the people is entirely at fault forever for what the governments do.

 

[HockeyBjj]

How about we just introduce a bill to wipe the United States' debt! Wouldn't that be nice!?!

 

[Arkain2K]

Is there something currently preventing Puerto Rico from declaring bankruptcy?

I'm confused. You want them to declare bankruptcy again while they're still in the previous one from last May?

Puerto Rico Makes Unprecedented Move To Restructure Billions In Debt
COLIN DWYER | May 3, 2017

Puerto Rico has asked for a form of bankruptcy protection to help it grapple with more than $70 billion in public-sector debt. The unprecedented maneuver, requested by the governor and filed shortly afterward by a federal oversight board, sets in motion what would likely be the largest municipal debt restructuring in U.S. history.

By comparison, Detroit's 2013 bankruptcy, which sought relief from some $18.5 billion in debt and liabilities, made it the largest such filing in the country's history at the time.

"After extensive discussions in good faith and the opening of the financial books of the Government of Puerto Rico to the creditors, there has not been sufficient progress in the negotiations," the U.S. territory's governor, Ricardo Rossello, said in a statement.




The situation now heads to federal court, where the struggle between Puerto Rico and its disgruntled creditors will be decided. The territory also has more than $49 billion in pension liabilities.

But don't call it a "bankruptcy," exactly, since the territory isn't technically eligible for the same Chapter 9 protection as states. Rather, Congress passed a law last year specifically to deal with Puerto Rico's debt problem, which has been simmering for years. Among other things, the law, called PROMESA, set up a federal oversight board to handle the territory's debt negotiations and imposed a stay on financial obligations it owed.

It set up a bankruptcy-like process tailor-made for Puerto Rico. NPR's Camila Domonoske recently broke down the procedure:

"PROMESA doesn't call this 'bankruptcy,' and it's not identical to Chapter 9. But the underlying principles are the same.

" 'It mirrors conventional bankruptcy processes that are ordered and arbitrated through a court system,' says Eric LeCompte, the executive director of Jubilee USA Networks, a religious development organization that supports debt relief and debt forgiveness.

"The 'Title III' process, as it's called in PROMESA, allows Puerto Rico to address all of its debts at once, in a comprehensive process — which even Chapter 9 doesn't allow, LeCompte says. It's essentially a bankruptcy process custom-built for Puerto Rico's debt crisis."

The island has been grappling with runaway debts for years, though the situation finally reached a crisis in 2015, when the island's governor at the time announced that its debts were unpayable as long as it hoped to provide basic services to residents.

Camila notes that since then, Puerto Rico has been buffeted by "defaults on loan payments, budget cuts and tax hikes" — including significant austerity measures for Puerto Ricans.

And those economic woes have taken their toll. In a court filing Wednesday, the federal oversight board laid out some grim numbers:

• Puerto Rico's labor participation rate is only about two-thirds that of the U.S. mainland.
• The territory's population has dropped by 10 percent since 2007.
• Nearly half of Puerto Rico's residents live below the federal poverty level.

The stay imposed by PROMESA expired overnight Monday, and The New York Times reports that right on cue, "bondholder groups and at least one bond insurer sued" on Tuesday.

As The Wall Street Journal reports, Puerto Rico will now "face off against angry hedge funds, mutual funds and bond insurers in the court-supervised proceeding known as Title III, a legal mechanism created by Congress to restructure debts by force if negotiations broke down."

In its filing, Puerto Rico's federal oversight board expressed optimism about the legal wrangling to come.

In other words, the board remains "hopeful that continued negotiations (including through mediation) will lead to consensual resolutions such that Puerto Rico will once again be able to experience economic and social prosperity after this difficult process is resolved."

http://www.npr.org/sections/thetwo-...-move-to-restructure-tens-of-billions-in-debt

http://forums.sherdog.com/posts/129658373/

 

[Kindacrazy]

I'm confused. You want them to declare bankruptcy again while they're still in the previous one from last May?

http://forums.sherdog.com/posts/129658373/

Ahh, so they are actually bared from declaring bankruptcy. That seems extremely corrupt.

 

[Rational Poster]

Puerto Ricans cannot govern themselves effectively, and the people there have long considers institutionalized corruption on the island to be a fact of life, this is undisputable.

No amount of money throwing their way will suddenly help Puerto Rican politicians become competent, this is also undisputed.

When children cannot do something alone and call for help, the adults should help.

Before we attempt your idea of a Stalinist Purge, I propose that we officially annex Puerto Rico into Florida, where most of the young Puerto Ricans have already migrated to years ago.

We love to poke fun at Florida, but Tourism is something they excels at, and I believe Tourism is Puerto Rico's most effective fishing rod, especially when paired with the enormous fleet of international cruise ships docking in Florida.

This is ridiculous.

Just give them statehood and we can treat them like Alabama, Mississippi, Louisiana, etc.

 

[Andy Capp]

I suppose painting Puerto Rico as the unwilling victim to the evil investors who bought Puerto Rican bonds with the interest rates set by the Puerto Rican government is more sympathetic to the uninformed public than pointing out that they have inevitably arrived at this point after decades of systemic corruption and incompetent.

Are you sure?
Because I'm pretty sure it's because of this, at least in large part,
The Jones Act, the obscure 1920 shipping regulation strangling Puerto Rico, explained
"The island of Puerto Rico is devastated, with millions lacking power, infrastructure destroyed, homes damaged, and an entire year’s worth of agricultural output essentially ruined. Like any disaster-struck place, it will be in need of supplies brought it from elsewhere in the country.

But getting goods from the US mainland to Puerto Rico is much more expensive than sending them to Texas or even to other Caribbean islands as a result of a century-old man-made disaster that’s been crippling the island’s economy for a long time.

Meet the Jones Act, an obscure 1920 regulation that requires that goods shipped from one American port to another be transported on a ship that is American-built, American-owned, and crewed by US citizens or permanent residents.

For most Americans, this isn’t a big deal — it enriches a small number of American shipowners while introducing some weird distortions into the overall pattern of economic activity in the United States.

For the residents of the island of Puerto Rico, though, the Jones Act is huge. Basic shipments of goods from the island to the US mainland, and vice versa, must be conducted via expensive protected ships rather than exposing them to global competition. That makes everything Puerto Ricans buy unnecessarily expensive relative to goods purchased on either the US mainland or other Caribbean islands, and drives up the cost of living on the island overall."

 

[Andy Capp]

This is ridiculous.

Just give them statehood and we can treat them like Alabama, Mississippi, Louisiana, etc.

It's clear he's overlooking the obvious for whatever reason just to diss Puerto Rico.

 

[Cubo de Sangre]

You talk as if politicians campaigned on a corruption platform and that the people is entirely at fault forever for what the governments do.

While it may not be the fault of the individual, it seems pretty clearly the fault of the citizenry as a whole.

Are you sure?
Because I'm pretty sure it's because of this, at least in large part,
The Jones Act, the obscure 1920 shipping regulation strangling Puerto Rico, explained
"The island of Puerto Rico is devastated, with millions lacking power, infrastructure destroyed, homes damaged, and an entire year’s worth of agricultural output essentially ruined. Like any disaster-struck place, it will be in need of supplies brought it from elsewhere in the country.

But getting goods from the US mainland to Puerto Rico is much more expensive than sending them to Texas or even to other Caribbean islands as a result of a century-old man-made disaster that’s been crippling the island’s economy for a long time.

Meet the Jones Act, an obscure 1920 regulation that requires that goods shipped from one American port to another be transported on a ship that is American-built, American-owned, and crewed by US citizens or permanent residents.

For most Americans, this isn’t a big deal — it enriches a small number of American shipowners while introducing some weird distortions into the overall pattern of economic activity in the United States.

For the residents of the island of Puerto Rico, though, the Jones Act is huge. Basic shipments of goods from the island to the US mainland, and vice versa, must be conducted via expensive protected ships rather than exposing them to global competition. That makes everything Puerto Ricans buy unnecessarily expensive relative to goods purchased on either the US mainland or other Caribbean islands, and drives up the cost of living on the island overall."

Pretty sure this fucks us over here in Hawaii too.

 

[BrotherClaudio]

Let’s wipe all debt away

What kinda crack are folks smoking these days?

 

[lifelessheap]

Good. Vulture capital funds should be illegal anyway. Fuck those people.

Was Puerto Rico forced to take the funds?

 

[Jack V Savage]

Was Puerto Rico forced to take the funds?

They were not. Neither were investors forced to invest in debt that was known to be very risky (and thus that paid high returns).