News about the economy

UPR Ponce, Bayamón, Mayagüez, Arecibo y Cayey all in a stoppage. Other regions will meet today and may join them.
I guess they did not wanted to take tests this week.

Rey I have heard rumors from friends in Fajardo that at some point there was offers on the table from Disney as well as a cruise port for the old base but they turned them down.  One friend said that they did make a deal with a company who basically tears apart ships/junks them who now is polluting that area.  Could there be any truth to that?

I think most of it is true.
The ship dismantling company is there and operating to some degree.
It is hard to say if the offers were reasonable or not since they are not public. But right now they are making no money from that land. They could carve it and sell it to locals with a requirement to build a home within 2 years but they will sit on it and wait for someone with a big budget for paying off corrupt politicians to make a deal.

I know for a fact about the cruise ship port but the Disney one was a surprise. Combining both, cruse ships and Disney would have been a superb deal for jobs and money to the area but I guess the bribes were not big enough.

I used to fly in there a lot, Boeing, Lockheed or SpaceX would be a good fit.

Thanks for the info Rey!  I thought even giving it away for free to one of the big players would have brought so much life to the area. But yes, I fear someone is waiting for a big enough kickback😔

Thomas173 wrote:

I used to fly in there a lot, Boeing, Lockheed or SpaceX would be a good fit.

As long as they do not bring ecological damage and heavy noice I am ok with those.

Well looks like so far 9 of 11 UPR recintos have voted a stoppage. They are asking for the moon, recognition of trans and the gender they decide to adopt, that the entire debt be audited with a moratorium on any payments until it is determined which debt is legal and which is not, also not accepting raise in university cost, not accepting the 300 million cuts, not accepting the law that cuts workers benefits, not accepting the single employer law. And a few others.
They pretty much have one chance in hell on getting any one of their requests and never mind getting more than 1. Federal Board does not care and the government is not really listening or in the mood.

Governor told the press today that there are no options for the university, they have to cut the 300 million, no other choices. The government is not going to cut 300 million from other parts of the budget, period.

Wow! All this about the UPR is crazy. I agree with you, Rey. They should "guide the guillotine" rather than just continue to refuse and refuse until the government decides for them. I am at the Recinto de Ciencias Medicas and I have heard that may leave us a little bit "safer" from cuts.

Gov. Rosello tweeted the following after the protests: "Hicieron su marcha. Tuvieron su dia libre. Vacilaron en SJ. Que Lograron? Ustedes no tienen poder. Respeten los rangos. #RealHastaLaMuerte"

While I see his sentiment, I think the only thing he will do with that attitude/tweet is continue to piss off the people who are already pissed off. I guess that's what he wants!

LOL, well the governor telling them they have no power and asking them what they accomplished will certainly piss them off. Could have simply said nothing instead and let the dog lay.
Guiding the guillotine would have been a smarter move by the students and management of UPR instead of marching but .... it is their right.

School consolidation. A list of370 schools are being considered http://www.elnuevodia.com/english/engli … s-2295363/

New Fiscal Plan, expect the Marbetes to go up, the property taxes will go up some also, traffic tickets, car insurance, other permits will average 10% more.

This is a proposal to the PROMESA Federal Board submitted for their approval, so things can change or be flat out rejected. I think it will have some amedments
http://rec-end.gfrcdn.net/docs/editor/plan%20fiscal.pdf (English).
.

PREPA Accused of Improper Practices
http://www.elnuevodia.com/english/engli … s-2295960/

For those of you that may not be aware, about a year or so ago, Puerto Rico started a Medical Tourism business. This was done while the number of specialist  keeps decreasing and they are moving to the states.

This article talks about the status of medical tourism effort which you may find interesting.
http://www.elnuevodia.com/english/engli … s-2298648/

Overview board wants to limit the number of days public employees work a month
http://www.elnuevodia.com/english/engli … y-2299001/

Plus other additional adjustments it wants
http://www.elnuevodia.com/english/engli … y-2299001/

Rey,

You know that the current government is playing a cat and mouse game with the board. The governor KNOWS he doesn't have a solid plan, he knows cuts are eminents, the difference between the current governor and the previous one is that this one will blame everything on the board. He will use the "it was not me, it was the board" game to deflect the cuts and tax increase to the people.
At the end, the people will still be caring the weight of years of bad government decisions and over expenses.
As long as the people continue voting for colors and ideologies the country will continue on the downward spiral.

adlin20 wrote:

Rey,

You know that the current government is playing a cat and mouse game with the board. The governor KNOWS he doesn't have a solid plan, he knows cuts are eminents, the difference between the current governor and the previous one is that this one will blame everything on the board. He will use the "it was not me, it was the board" game to deflect the cuts and tax increase to the people.
At the end, the people will still be caring the weight of years of bad government decisions and over expenses.
As long as the people continue voting for colors and ideologies the country will continue on the downward spiral.

Yea I agree 100% it is a game being played. Either way we are getting screwed without any lubricant.

For those of us planning to retire in the island, we will need to take into consideration the potential increase in commodities and daily expenses. I recommend calculating an extra 15-20% in you budget for the next few years. Add to that a plan to travel to the mainland for major medical procedures.

Here's an article from the NYT in re PR teacher's pension funds.  These pensions are not that different from social security and state pension funds Stateside, PR just got to the ultimate result faster.  Latins are less efficient and more corrupt with government than their Anglo cousins.  So it will take places like the US longer to get to the same place, but they shall.  This is what happens when you trust politicians with money, or when you use politics to grant yourself benefits at the expense of others.

https://www.nytimes.com/2017/03/08/busi … e&_r=0

In my Humble Opinion, A lot of those issues are caused because the government does not put the money in that they should and promised, and the fact that they are not usually invested or invested in crappy investments. The administrators sometimes take nice trips and treat themselves like royalty.

In the US the Social Security extra is usually used by congress for other purposes and it is not invested ever, so there are lean times and rich times (mostly lean times) then the government, treats it as an entitlement so they always want to cut it, raise the rates and extend the age, If they would have invested the money in rich times the bag of money would have become trillions of excess money instead of running out of money when population changes.

ReyP,

That is the eternal nature of government.  Everywhere.  It is "less bad" in some places.  Perhaps there are a precious few exceptions here & again that are made into the unrealistic & improbable examples to sell "here's what we will do".  But in practice government looks out for itself, makes promises it cannot keep, and accumulates power.

It is why, imperfect as they are, normal people are better off controlling their own lives, including retirement.  Yes, some of them will do a lousy job or blow it off.  But we know that government will do a lousy job, or even a fraudulent job.  Best to keep money & power away from them.

SteuernAnwalt wrote:

ReyP,

But in practice government looks out for itself, makes promises it cannot keep, and accumulates power.

.

What you are describing is corporate America at its best!!

Well the game is in full swing, the Federal CONTROL board has rejected the governor plan and among several changes, it is requesting that the budget of UPR be cut in total by 450 million, just a few weeks ago the required cut for UPR was for 300 million. Not sure why the extra 150 million cuts.

The Government of PR has until today Saturday March 11 to make modifications to the economic plan in order to be certified on Monday March 13. If the board does not receive  the set of changes requested today or if the changes do not align with what was requested they will officially reject the plan.

If the plan is rejected on Monday, the board could start ordering cuts and layoffs with or without the cooperation of the government, Basically a financial dictatorship.

Looks like Monday March 13 will be a day in the history of Puerto Rico. How the Federal Control Board will affect the economy is hard to say, but initial numbers look like the GDP will drop like a rock if the board implement forced cuts of 7.6 billion (original request) or more since they increased some of the numbers of cuts requested.

Will Monday be D day or just another day? - we will have to wait how it plays out.

** Responders: we know the government of PR has been playing games so they are not accused of being the ones that made the cuts, and that some of the board member forcing the cuts may have ethical issues due to previously working for banks that issued and controlled the bonds and some of the board members have a lot of bonds themselves. We also know that neither the governor not the members of the Federal Control Board are interested in Auditing the Debt to see which is legal and which debt is illegal. The debt gets worse the longer the delays for action, but paying all the debt even if discounted some by the courts it is going to hurt. An investigation into which debt is legal or not could result in the flat out elimination of some of the debt and higher payouts to those that are found to have been issued legally, I guess we will never know, the board nor the governor seem to want to perform the investigation.

PR is hopeless at this point. Illinois, California and some others aren't that far behind.

Last minute attempt by the governor to save the financial plan. Alternative is that the Federal Control board on Monday may enact their own plan.
http://www.apnewsarchive.com/2017/Puert … e21a63247f

Well the board did not approve the governor fiscal plan today. They requested several cuts. It is unclear what the next steps are. Is the governor going to make the changes to the plan and implement the cuts requested or is the board going to impose it own plan.
Either way we are looking at an accross the board cut of 10% of retirement plans, elimination of xmass bonus, tens of thousands being layoff and several other adjustments.
Short article: http://www.apnewsarchive.com/2017/A-fed … b41a3d2624

After several changes to the last amended plan, the federal control board approved the financial plan for Puerto Rico. Some of the changes require the goverment to find additional savings otherwise a set of cuts have to be implemented. Basically there is a delay in some of the cuts provided the goverment is able to show additional savings.
Article: http://www.elnuevodia.com/english/engli … t-2300197/

How true is it that PR was looking for a bankruptcy position to start over?

Depends who you ask. Governor seems to want to negotiate with the bond holders and have ask that all law suits be frozen until end of year.
Some bond holders representing 10billion, want the extension also because with negotiations they may get more. Given the serious shortness of funds a court case will likely chop off a significant portion of the debt, that is something the bond holders don't want. If they can negotiate a 30% hair cut, it is a lot better than a court ordered 80% hair cut. Sec may also get involved in the future if there is an unlikely investigation of the debt, its processing fees and length of the deals. But that is not likely to happen, the people want It investigated, but the governor and the financial board do not.

A lot of people believe that only 1/3 of the 70+ billion debt was issued legally, so the want the rest to be declared null and void, the want the remainder 1/3 to then be taken to brankrupcy court and hat the investigator go after the banks and politicians. None of that is likely to happen in my opinion.

As a Bond holder, I wouldn't either. Yet as a citizen, I'd want a do-over. There's a hit either way.
Investors say no thank you, no don't pay your bills. The Country's rate goes down. Citizens take a hit on property value.
Flip is it becomes an open market (smaller dollar), property value still goes down, taxes probably increase, yet opportunity to gain. From a smaller position.

Think that's what they call the Catch 22..
Dammed if you do, dammed if you don't.

Quite a pickle, aye? Nor'easter expression... excuse me...

All debt is future consumption brought forward.  Everyone liked the consumption.  The paying part....not so much.  A thing that cannot continue shall not continue.  Here we are.

The board is estimating yearly payments or should I say servicing or about 800 million, on 72 billion, to be that is somewhere around 1/2 of the interest and none of the principal. or Am I wrong?

At that rate it will be 1000 years before it get payed, sounds like a credit card, LOL.

According to the latest census, there has been a major exodus of the population in PR. The numbers are from 2010 to 2016.
The towns most affected were: Lares, Guánica, Peñuelas, Fajardo, Mayagüez, Las Marías, Yauco, Ponce, Ceiba y San Juan. Their population reduction is between 12 and 13.1%. I guess there should be plenty of properties there for the taking, some of you were looking at Las Marias, well sounds like a good choice.

Population in total went from 3,721,525 in 2010 to 3,411,307 in 2016.

Only the Gurabo municipality had a small increase.

Of the towns not mentioned, they average around 5% drop in population.

Article (Spanish): http://www.elnuevodia.com/noticias/loca … s-2303602/

One of the legislators in PR is saying that due to the cuts being imposed on the towns, the rate for property taxes will likely go from .38% to .65% which would be a raise in the property tax of around 70% on average based on his calculations.

This would be significant if true.

That means rents will go up, among other things. Hey, does anyone know if it is true that PR does not obide by the Federal minimum wage? I have never met anyone making below the $7.25 min wage.

PR is bound by the federal minimum wage.

Before the PROMESA law was signed in 2016, Puerto Rico was fully bound by the US Federal Minimum wage. However the PROMESA federal law allows the Government of Puerto Rico to set the minimum wage (for workers under 25) at $4.25, 4.50, or 4.75, one of the 3, I do not recall the exact amount in the law.

However, for now, the goverment of Puerto Rico has said no to that option. So technically they are still bound by the Federal minimum wage until they decide to enact that part of the PROMESA law.

mac00677 wrote:

That means rents will go up, among other things. Hey, does anyone know if it is true that PR does not obide by the Federal minimum wage? I have never met anyone making below the $7.25 min wage.

More than likely rents will go up, yes. But it is not yet a done deal, just another politician making a point. Not yet even a proposal for it.

It is a way for the municipalities to make their money without having to work, they do not want to go an re-assest the properties, just raise the rate for the extra money, so zero effort on their part.

People working under the table, and as such not paying any taxes and not paying for medical either could be making less than the minimum, who are they going to complain to? Besides they may be taking more money home than the ones getting minimum federal but having to pay taxes, Social Security, Medicare, and other stuff. Declare no income, get welfare, coupons, free medical and make money under the table, great life!!!

Puerto Rico has illegal aliens also, most of them from the Dominican Republic, and they do not necessarily get payed the Federal wage.

The federal control board (Promesa) has requested that the PR goverment submits for their approval all new laws along with a certificate of compliance with the agreed upon budget and what impact the laws will have on the budget. They (federal control board) have veto powers, so this is going to get fun real soon. I am sure sparks are going to fly. Basically that eliminates most of the control the government has on the country and it stops democracy. The goverment can pass any law and the board can let it go or veto it.