Puerto Rico's Sovereign Debt Crisis

Rey: You don't trust the politicians, the junta, the board. the Congress. Who do you trust?

Me

And you have the power and wherewithall to fix everything.  OOOOkay.

Never said I could do anything, you asked me who I trust and I answered.

Well this is a nice way to control Zika, and lower the Puerto Rican population which will make the taxation worse, but at least in PR this amount will not last long, probably a day only. http://www.nydailynews.com/life-style/h … -1.2621133

Apparently, nobody told the PTB in New York that Puerto Ricans are devout, practicing Catholics. Sending mosquito nets and repellant probably would have been more effective.

ReyP wrote:

Well this is a nice way to control Zika, and lower the Puerto Rican population which will make the taxation worse, but at least in PR this amount will not last long, probably a day only. http://www.nydailynews.com/life-style/h … -1.2621133

OMG What a total joke!!! Condoms aren't going to help.

Maybe they are for the mosquitos?
This way they won't reproduce as often.
But they need to be a little smaller.
If you hang the full size ones under plants and around the house they may get stuck in the lubricant and die, so they don't bite anyone.
It could work
Mosquito safe sex, great idea

Actually, Rey, here in Georgia, scientists are working on producing sterile mosquitos to be released in places where mosquitos breed.

I know that but condoms for mosquitos is funnier.

Yup!! Lol

a little history and a little about the current house bill:

http://reason.com/archives/2016/05/06/p … as-version

John Olive's interpretation is similar, but much more entertaining.

Cuba, the Dominican Republic and Puerto Rica are working on closer ties to improve trade. As a group, the block should lobby against the Jones Act. Having easier access to respective markets and the short distance, benefits all. Investors are hungry for Cuban investments, especially after the next president takes office and does not reverse the policy towards Cuba. Using this influence should accumulate sufficient money to adjust the shipping restriction on Puerto Rico. I hope.

Looks like somebody may be going to jail over some irreguarities in the purchase of fuel for AEE. Aparently the investigation results were send to a federal judge or prosecutor. Apparently there nay be several fraud charges coming down.

http://www.bloomberg.com/news/articles/ … human-toll

U.S. Treasury Secretary Jacob J. Lew said the future of 3.5 million Americans in Puerto Rico in the hands of Congress.

His department has done what it can to help the moribund economy weather the $70 billion debt crisis, and now it’s time for Congress to act, Lew said Monday during a trip to the island’s capital, San Juan. He took the Obama administration’s appeal to Puerto Rico the day before House lawmakers reconvene as the territory faces another bond payment on July 1.

The Treasury doesn’t “have the ability to accomplish what the legislation can accomplish,” Lew said during his second visit to the territory this year. While he concedes that lawmakers have made a “good faith effort” to pass a bill in Congress to restructure Puerto Rico’s debt, “the time for action is now.”

Lew spent the day visiting a school and a medical center, and holding talks with local government officials, business leaders and community organizers. He reiterated his stance that restructuring may be the only way to avoid chaos.

Infrastructure is crumbling and the fiscal crisis is taking a human toll, he said. The interests of pensioners must be balanced with those of bond holders, but a perfect solution for everyone isn’t possible, Lew said.

Puerto Rico ran up debt across more than a dozen issuers as it struggled to keep the economy afloat. This month, it missed a deadline for a $422 million bond payment for its Government Development Bank. Lew warned last week that the island faces a series of “cascading defaults” and may need a U.S. government bailout if Congress doesn’t act.

The economic woes are seen continuing as a local agency projects a fifth straight year of contraction. Schools and hospitals have started scaling back services because workers can no longer be paid. The cuts come as health officials warn that the mosquito-born Zika virus threatens to sweep through the commonwealth on its way from Brazil.

With no money left to have public schools and septic tanks cleaned, the island has become a breeding ground for the Zika virus and influenza, according to local media reports. Health-care professionals are fleeing in droves even as about 629 cases of Zika are confirmed, the reports say.

QuickTake: Puerto Rico’s Slide

U.S. lawmakers are now faced with passing a bill that will allow Puerto Rico to reorganize its debt and implement a federal oversight board that would weigh in on its budgets. Republicans are seeking to produce a revised bill.

A new version of a bill to help Puerto Rico address its debt crisis may advance next week toward floor action, according to Representative Rob Bishop of Utah, chairman of the House Natural Resources Committee. The draft won’t have significant changes and the basic concepts of the bill, to get Puerto Rico out of its fiscal crisis, are the same, Bishop said Monday during an interview at Bloomberg News’ offices in Manhattan.

Speaking to reporters after the day’s events, Lew said he’s trying to get a “workable” bill that gives the island a sustainable path forward. Bishop’s core approach is sensible, and there’s “every reason to believe this can be solved,” Lew said.

The next key date is in July when $2 billion falls due, including so-called general obligation bonds that have the highest level of guarantees. Missing those payments would deepen the worst crisis to hit the $3.7 trillion U.S. municipal market.

While the U.S. slowly recovered from the recession that hit in 2008, Puerto Rico’s decline has been unrelenting with unemployment hovering near 12 percent and the population shrinking.

“Right now there is an ability to restructure but if Congress waits too long, that capacity will not be there forever,” Lew said.

Puerto Rico Bill to Obama by July 1 Is `Feasible,' Bishop Says

http://www.bloomberg.com/politics/artic … ishop-says

Finalmente

Is this 11 Billion inclusive of the $73 Billion?

Puerto Rico senate turns over bond fraud probe to FBI


By Caribbean News Now contributor
http://www.caribbeannewsnow.com/headlin … 30329.html

SAN JUAN, Puerto Rico -- A special commission looking into allegations of fraud by the financially troubled Puerto Rico Electric Power Authority (PREPA) has turned over its findings to US federal authorities for further investigation, the majority leader of the island's Senate said on Monday, the Associated Press reported.

Officials with the US attorney's office and the FBI spent two days last week picking up material gathered by the special Senate commission in its investigation of the electric utility, Senator Anibal Jose Torres said.

Earlier, the commission had submitted its findings to the island's Justice Department.

The special Senate investigative commission has been looking into allegations that the utility overcharged customers by hundreds of millions of dollars while amassing billions in debt in recent years. Utility officials appearing before the commission denied wrongdoing.

The commission, which has entered the final evidence-gathering stage of its investigation, has found "sufficient information to refer to other branches of local and federal government," Torres said in a statement.

On June 24, 2015, the Small and Medium Businesses, Commerce, Industry and Telecommunications Commission of the Puerto Rico House of Representatives, issued a 23-page legislative report outlining how government officials in Puerto Rico conspired with Wall Street firms to commit $11 billion dollars in financial fraud.

According to the report, PREPA paid previous bondholders with capital received from new investors, which is the classic hallmark of a Ponzi scheme.

“Noteworthy is the fact that the aforementioned took place in the face of the credit houses, whom, knowing this, and therefore PRPA’s technical insolvency, allowed this public corporation, and thus the people of Puerto Rico, to continue running into debt,” the report said.

The Commission recommended last year that the report be forwarded to the US Justice Department and the Securities Exchange Commission (SEC) for corresponding action, however, Monday’s announcement is the first indication that the FBI and the US attorney’s office have taken an interest in the allegations.

Last month, a US District Judge overseeing a class-action lawsuit against PREPA and the world’s largest fuel oil suppliers for perpetuating an extensive fuel oil fraud has upheld claims that the defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and denied motions to dismiss the suit, allowing RICO claims to continue against PREPA, Shell Oil, Petrobras, Alchem and various other laboratories and fuel oil suppliers.

In the original RICO complaint, filed February 24, 2015, in the US District Court for the District of Puerto Rico, Puerto Rico residents and businesses accused PREPA and 20 defendants of perpetuating an extensive fuel oil fraud, resulting in users of electricity in Puerto Rico being overcharged by more than $1 billion dollars for electricity since 2002.

The suit states the defendants received kickbacks and payments for colluding to raise fuel oil prices that were directly passed to users of electricity, by agreeing to use non-compliant fuel oil and falsifying lab tests.

This is, however, a civil claim and questions have been raised as to the apparent failure of the local FBI office and the US attorney in Puerto Rico to pursue any investigation into these allegations.

Another article in English: http://www.elnuevodia.com/noticias/poli … e-2198169/
I worry the most about the health care system.

You may remember that the supreme court took a case to determine if the Law in PR that allows the government to declare bankruptcy is valid or not, which previously it was declared unconstitutional.

By the end of June the supreme court needs to make a determination, however some are of the opinion that the court may rule one way or another sometime in May, some say there is a good possibility that it may be next week.

In the event that court rules in PR favor, it is unclear if the action or inaction going on about the control board would override the local law.

If PR is able to have its bankruptcy  law declared constitutional, it can offer the bond holder substantially lower terms on the repayment and even declare some of the debt null and void. Given that it is unclear that the board would also impose another set of bankruptcy terms.

Some have expressed the belief that this is putting strong pressure on congress and the bond holders because it is believed that the terms by PR would be significantly lower than a US bankruptcy court. As such it is likely that congress may move faster to get the bill passed before the courts render a verdict.

Continuing that line of thinking I venture that if the courts go with PR in this issue and the congressional law passes also with a strong board in charge, that PR Government is going to protest and point to the PR law as a way that the Island will take care of the problem.

It is hard to believe that even if both laws are passed, that PR and the board will both start taking steps to renegotiate the bonds, I think and could be wrong that law suits and other court cases will develop which will slow down the implementation of both laws. All of this resulting in more inaction.

While there are a lot of Puerto Ricans that believe that PR politicians can not be trusted and as such they need the board to be strong and override the government, a significant number of people do not like the idea of a board that can circumvent the government even if the government is not trustworthy.

I expect demonstrations, civil disobedience and more. Specially if the law passed by congress has anything about Vieques.

IMHO this is going to drag some more even if there is action by the end of May or earlier.

Here is an interesting article, seems like some congressmen are asking if the constitution OBLIGATES congress to take action, some seem to be afraid of getting involved and say that PR should deal with its own problems, yet PR does not have the ability as of today to do their own bankruptcy. Since PR is also not a sovereign nation it can not go to the IMF and get help either, so it is really stuck. So far it looks like we can not count on congress, no count on bankruptcy, and no option to get help from the IMF. 

Maybe the court will go ahead an declare that PR has the ability to declare bankruptcy and then Congress won't have to deal with it.

Some in congress have even sugested that congress should just declare PR independent.I wonder what they are going to say when they declare PR independent and Russia decides to put military bases there?

http://thehill.com/policy/finance/27983 … -the-right

Very interesting!

It is possible that for the first time in many years, that the independent movement in PR may grow significantly given that congress does not seem to care much for PR. They never amounted to more than 8% in a good year, that may change soon.

The U.S. always came to the aid of its territories. When settlers needed help defending themselves against attacks by the native population, Congress sent the cavalry and established forts.

Puerto Ricans are, after all, U.S. citizens. Shame on the Conservative members of Congress for turning their backs and snubbing their noses at 3-1/2 million U.S. citizens.

Well it looks like Sander's is sounding off all the right notes in PR. Supporting a status referendum, supporting a true bail out similar to the one for wall street and bankruptcy protection.

Even if he wins, some of that may be hard to get specially the bailout, not with a republican congress.

The US needs to be able to find PR in the map before they can even be concerned, I am still being asked by some people how hard was it to get my green card.
http://money.cnn.com/2016/05/16/investi … index.html

Rey, I have been ask if we can drive to the island. My answer is that the bridge from Florida is still under construction. 

adlin20 wrote:

Rey, I have been ask if we can drive to the island. My answer is that the bridge from Florida is still under construction. 

Just like the bridge from Ceiba to Viequez, it should only take a few thousand years and by then the florida bridge will need to end in Georgia as most of Florida will be under water.

Well at least those seem to consider it part of the US.

Looks like Clinton (potential First Husband ... Sounds weird) did not do too well today at his first 5 minute speech. Look like it received a luke warm reception. Also just got there and leaves today, so just a few hours in the island, I guess he is not enchanted with it.

Too bad Spain is going thru a lot itself, And can not help

Question: Is Monica going back to the whitehouse also or a new intern?

Clinton did not help or cared about the island when he was president what make anyone think he will now.

adlin20 wrote:

Clinton did not help or cared about the island when he was president what make anyone think he will now.

People have bad memories, they dont remember how he did us in. They even forgot Monica and the famous "define is".

They haven't forgotten about Monica. They just don't care now. I never did care. I do care that a current candidate has a huge class action suit for fraud filed against him and that he refuses to release his tax returns as all other candidates since 1976 have done.

People focus on parties even if the candidates are worthless. Until we as a a society start holding politicians accountable and start voting with our heads instead of political parties these problems won't change. Neither one of the mainland parties care of the island.

Actually, there are members in both parties that claim to care, but it appears more are in the Progressive camp rather than the Conservative.

http://thehill.com/policy/finance/26874 … uerto-rico

adlin20 wrote:

People focus on parties even if the candidates are worthless. Until we as a a society start holding politicians accountable and start voting with our heads instead of political parties these problems won't change. Neither one of the mainland parties care of the island.

Well in PR we are very good at selecting goverments that do us in, then 4 years latter we pick another set of deathbeats.

Did you guys hear about the proposal to reduce the number of municipalities from 78 to 20?
Not sure what you think, but having 78 mayors and associated personnel for each of 78 of them sounds like a lot of money and a lot of opportunity for corruption. Maybe we will end up concentrating the mistakes and corruption into 20. It will also be cheaper to send 20 mayors to jail than 78 of them.
Let's see if this goes anywhere,LOL

Here is something the people forgot. Clinton signed this into law.
This is a quote, not my words

Puerto Rico's economy depended heavily on the tax incentives given to U.S. mainland companies and on federal transfers; the code went into effect in 1976. In 1993, President Clinton aimed to cut the Section 936 of the U.S. tax code, which exempted the profits earned by American companies from federal taxes. A more modest tax credit linked to wages paid by those companies in Puerto Rico rather than to profits was introduced. It is estimated that 100,000 Puerto Ricans were employed by companies operating under Section 936 (of which 23,000 are in pharmaceuticals) and another 200,000 are indirectly employed.

In 1996, Congress opted to phase out Section 936 by the year 2006. To no ones surprise, the number of manufacturing jobs on the island dropped by almost half by 2014.

Well another draft, another set of people that do not like something or another. The governor may go to the UN decolonization annual meeting which was under represented in the past.

Did anybody noticed the call from the governor to young men that they should really think about joining any of the military forces, basically stand, look how they are treating us, do you really want to join the military the way they are treating your island? - That is a very strong statement by a high ranking leader, I wonder if the need for a job is going to trump the call not to join. We no longer have an active draft and PR does send a lot of young men to the military. It is possible that PR participation may drop significantly.

But an even more interesting thing, is the current set of meeting going on about space, PR is promoting itself as a possible place to launch and return space crafts due to the closeness to the equator. Also promoting the Roosevelt Road area for Aero space companies. Well my place in Ceiba may become a great place to watch rockets take off, may need to charge admission fee, LOL, I wonder what the noise is going to be. Hope they don't take off from there.

There is a lot of movement in trying to bring good hi tech jobs to the island, lets see how that goes, but concern with the possibility of poisoning of the land and seas.

FYI:

http://www.wsj.com/articles/republicans … 1463669249

Will PR become another Venezuela with sporadic riots?
Not for lack of food, but because of the board and some people believes that its goal is getting the bond holders payed at the expense of massive layoff, closing of hospital, mass exodus of doctors, curtailment of services and no money for retirees.

While a lot of people are against the government of the island because their action got us into the mess, they still want a say of what happens in PR. The board does not seem to allow the people to have a say of what happens in PR. Does it make any sense to even vote for the next governor and 78 mayors over the next 5 years if the board is the one in charge?

I could be wrong but after the board takes over, I expect mass demonstrations that could turn ugly. Hopefully .... I am wrong.

What do you think it is going to happen?
Will people be relieved that the board and not the government is in charge?
I am sure you all have an opinion.

Venezuala is an independent country. PR is not.

The Obama plan is to let Puerto Ricans decide what's best for them: independence, staus quo or statehood. Problem is, Puerto Ricans can't decide among themselves. Meanwhile, PR has a little breathing room to think about it.

Detroit had riots in the late 60's due to unequal rights and discrimination. Before Detroit went bankrupt  those who could left. Riots did not follow. Those who remained were more concerned about survival and some worked with what they could. The financial crisis of 2008  had major losses to peoples savings and holdings. I do not recall major rioting over this. The potential  governing body over Puerto Rico could be reminiscent of colonial times. It could bring to the surface unfinished business  and put the USA in the spotlight of Imperialism. I think Puerto Ricans are very familiar with this kind of treatment. Maybe in the big picture, when this kind of scenario  takes place in some states like Indiana and New Jersey and they fall into the same situation and the resolution to their problems are resolved in a more equatable response  than what is taking place here  Puerto Rico may be seen more clearly as to how it could be discriminated against. These are only thoughts.

All very good points. Thanks

News: Looks like several unions are against the new draft proposal and want congress to reject it.

In a letter to Congress Friday, the American Federation of Labor-Congress of Industrial Organizations, American Federation of State County and Municipal Employees, Service Employees International Union and unions representing workers in the auto, aerospace, manufacturing and food industries said that the bill "provides no economic stimulus."
“Congress must, however, get back to work immediately to provide real solutions that allow Puerto Rico to negotiate a feasible debt restructuring plan, protects Puerto Rican workers and retirees, and provides economic stimulus so that the territory may achieve economic growth," according to the letter.

Link: http://www.bloomberg.com/news/articles/ … escue-bill