Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Puerto Rico files for biggest ever U.S. local government bankruptcy

reuters.com

Post reply on HN
Print view View original

51–60 of 481 posts

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#51

Post by nopinsight »

toomuchtodo wrote: post #16
bpodgursky wrote: post #13

Earlier quoted context omitted.

> and the federal government will backstop the states I think it's unlikely the federal government will be backstopping pension problems in IL and CA anytime soon, without a dramatic congressional shift. I think you underestimate how much taxes will need to raise to cover these liabilities. The federal government already has its hands full with SS + Medicare commitments it can't handle. I'd rather see failures and ba…

> I think it's unlikely the federal government will be backstopping pension problems in IL and CA anytime soon, without a dramatic congressional shift. Agreed. That shift is going to happen though. Seniors are not a cohort you can ignore. They vote like clockwork. > I think you underestimate how much taxes will need to raise to cover these liabilities. The federal government already has its hands full with SS + Medic…

Unless the brinks of defaults will happen in close successions in > 20-30% of the country, what are the incentives for MPs to vote yes on the backstopping for jurisdictions far from their own?

> Reform will not happen. That's code for "cutting benefits".

The benefits to be cut will happen in a few small areas given the size of the US, thus will not affect the majority of lawmakers. If the GOP controls the Congress, that doesn't seem like a large enough impact for them to change their overall ideology towards pension subsidies.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#52

Post by leesalminen »

ThrustVectoring wrote: post #31
knob wrote: post #5

I have lived all my life in Puerto Rico, and as you can imagine, this issue is quite controversial. We owe money to the creditors... and what you do with a debt is to you pay it off. Yet the amount is so staggering, that I wonder if it's actually possible. As is typical, decisions by politicians placed us in this situation. Decade after decade, 4-year term after 4-year term, the government has spent money it does not…

>Lots of people are leaving the island, which just compounds the problem (less revenue). This is one of the effects of Puerto Rico being subject to US minimum wages. Since it's illegal for large portions of the population to receive pay commensurate to the value they're able to produce, and it is legal to move to the US, guess what folks do?

I've heard this a few times and think I agree. Anyone in disagreement on this? Would love to hear an opposing view.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#53

Post by bingomad123 »

knob wrote: post #5

I have lived all my life in Puerto Rico, and as you can imagine, this issue is quite controversial. We owe money to the creditors... and what you do with a debt is to you pay it off. Yet the amount is so staggering, that I wonder if it's actually possible. As is typical, decisions by politicians placed us in this situation. Decade after decade, 4-year term after 4-year term, the government has spent money it does not…

Don't worry USA is on the same path.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#54

Post by jlg23 »

savanaly wrote: post #23
vkou wrote: post #10

Earlier quoted context omitted.

> We owe money to the creditors... and what you do with a debt is to you pay it off. That's not the case. Sometimes, you pay your debt off. Sometimes, you default, and file for bankruptcy. For lenders, it's the cost of doing business. If they don't want to deal with the possibility of bankruptcy, they shouldn't lend out money. Lenders charge creditors a premium, because of the risk of default. It's as much on them to…

That's true in any individual case. But if we make it our social norm that bankruptcy is nothing to be ashamed of and to be taken lightly, won't it change the equilibrium for future generations of lenders and borrowers such that an inefficiently low amount of lending goes on? If everyone has the expectation that the lenders and borrowers will try their best to live up to the contract they made in good faith, wouldn't…

> If everyone has the expectation that the lenders and borrowers will try their best to live up to the contract they made in good faith, wouldn't it be a better equlibrium?

What makes you think Puerto Rico did not try? How much longer will the poor have to suffer until you accept they've learned their lesson? Some facts about Puerto Rico:

Puerto Rico is poor, almost half of the people live below the poverty line.

They already, for years had to pay higher taxes and fees on almost everything to fight the deficit.

Years ago the first economists called for a restructuring of the debt because it's highly unlikely Puerto Rico will ever be able to repay it.

For years, those with a good education left Puerto Rico because there is no hope of turning the country around while staying on the current course.

From some abstract moral-focused point of view you are absolutely right of course, but here I agree with Berthold Brecht: Food first, moral second. ("Erst das Fressen, dann die Moral!").

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#55

Post by leesalminen »

creaghpatr wrote: post #11

A few months ago I discussed this with friends and suggested the government subsidize cheap flights to Puerto Rico, say $30 for a round trip flight from Atlanta, scaled up depending on domestic distance. This would cost taxpayer money but would drive a ton of tourism to Puerto Rico (albeit temporarily) and pump a bunch of money into their economy, defibrillator style. I've never been there but given a cheap round tri…

I flew from DEN to SJU a couple weeks ago on 2 days notice. Flights were cheaper than going to SFO or PDX.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#56

Post by maxxxxx »

toomuchtodo wrote: post #39
DamnYuppie wrote: post #33

Earlier quoted context omitted.

My biggest concern and issue with the federal government backstopping pensions is that the vast majority of people would now be paying for benefits for people who rendered services in areas they didn't live. Because the populace of one city voted to give certain benefits to public sector employees why should I be held accountable for that decision? I neither had a vote nor partook of their services. I am sure I am be…

The EPA is going to spend millions of dollars to clean up Flint, Michigan's water supply lines; you don't get a say in that either. "Representation" is a bit of a vague concept in US governance.

I am fine with bailouts as long as systems are being put in place to avoid repeating it in the future. That's for Flint, pensions or banks. Obviously the prevention step never happens....

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#59

Post by dragonwriter »

ThrustVectoring wrote: post #31
knob wrote: post #5

I have lived all my life in Puerto Rico, and as you can imagine, this issue is quite controversial. We owe money to the creditors... and what you do with a debt is to you pay it off. Yet the amount is so staggering, that I wonder if it's actually possible. As is typical, decisions by politicians placed us in this situation. Decade after decade, 4-year term after 4-year term, the government has spent money it does not…

>Lots of people are leaving the island, which just compounds the problem (less revenue). This is one of the effects of Puerto Rico being subject to US minimum wages. Since it's illegal for large portions of the population to receive pay commensurate to the value they're able to produce, and it is legal to move to the US, guess what folks do?

> Since it's illegal for large portions of the population to receive pay commensurate to the value they're able to produce, and it is legal to move to the US, guess what folks do?

If they can't produce enough value to justify minimum wages, why would they move to places with a higher cost of living? They move to the States because the States are better able to attract businesses that will pay them what they are capable of producing (even though the States still have at least the Federal minimum wage, and offlten higher minimums), because the States face more favorable federal policy because Congress and the President need their votes, whereas they don't need PR's because PR doesn't get any in the Federal government.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#60

Post by [deleted] »

toomuchtodo wrote: post #39
DamnYuppie wrote: post #33

Earlier quoted context omitted.

My biggest concern and issue with the federal government backstopping pensions is that the vast majority of people would now be paying for benefits for people who rendered services in areas they didn't live. Because the populace of one city voted to give certain benefits to public sector employees why should I be held accountable for that decision? I neither had a vote nor partook of their services. I am sure I am be…

The EPA is going to spend millions of dollars to clean up Flint, Michigan's water supply lines; you don't get a say in that either. "Representation" is a bit of a vague concept in US governance.

[deleted]
Post reply on HN