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

111–120 of 481 posts

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

#111

Post by eagletusk »

SEJeff wrote: post #65
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…

What are your thoughts on Puerto Rico becoming the 51st State of the USA? I ask this as a native (mainland) born American who always thought this would be an interesting approach to solve the problem of finances in PR. Is it even well supported or is it a crazy idea?

Why would USA want PR as 51? What benefit is there?

PR has more debt that California, and zero industry except for Bacardi rum.

Name one thing made in PR?

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

#112

Post by ryandrake »

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…

If your goal is to pump money into their economy, why not pump it directly instead of subsidizing some industry and hoping that somehow the "pumping" happens indirectly? Trickle-down mentality is still alive and well, sadly.

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

#113

Post by cjalmeida »

dragandj wrote: post #84
vkou wrote: post #44

Earlier quoted context omitted.

We already live in that society. What do you think the millions of people working in finance do, if not try to quantify risk? Do you want to live in a society where you and your family can be sold into slavery if you fail to pay off your debts? Because that's the logical consequence of not allowing debts to be discharged from bankruptcy, regardless of your ability to pay. Being a money-lender shouldn't be a license t…

There are other models other than two extremes. For example, in (at least some) European countries there is not such thing as private person going bankrupt. However, of course that that person won't be sold to slavery. Simply, if you can not repay the loan, your property will be confiscated and sold to repay it. You can dodge that by not having any property on your name, of course, and most such people do that, but t…

Ok. In this model, you keep one of your basic rights (freedom) but forever loses another (right to have any property). I'd call this a "semi-slavery" model.

At least in some "debtor's jail" systems you could get your rights back after spending some time incarcerated.

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

#114

Post by ue_ »

dragonwriter wrote: post #59
ThrustVectoring wrote: post #31

Earlier quoted context omitted.

>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 capab…

>If they can't produce enough value to justify minimum wages

There are alternative views on this. Marx's theory for example says that workers are not paid according to the value they create, or what their labour creates, rather they are paid at the rate which is required to sustain them. The commodity which the worker produces and sells is termed 'labour power', requiring among other things food, enough to support a family if he has one and some amount in accordance with the moral character of society, varying with supply and demand accordingly. This is the minimum that needs paying.

So Marx would say that wage has nothing to do with value created. It only has to do with the value of labour power, which is equal to the value needed for the worker to sustain himself.

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

#115

Post by xmlblog »

mjevans wrote: post #70
EternalData wrote: post #3

I feel like local governments are going to be the first to really be affected by significant pension overlays that are not properly accounted for -- a lot of pension funds assume rates of return that are historically farcical. I think the industry average used to be about 8%. "During the 20th Century, the Dow advanced from 66 to 11,497. This gain, though it appears huge, shrinks to 5.3% when compounded annually." htt…

The answer to pension problems is real socialism. Produce in bulk, provide in bulk, eliminate the waste and middle-person profit by providing as much of the pension as possible directly so that the allowance for other items can be of a much smaller serviceable size.

Which is why Cuba, Venezuela, and North Korea are doing so well. I'm astounded people still think the idea of central production control has any juice left in it after such a thorough debunking in the 20th century.

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

#117

Post by VLM »

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…

The problem with that is large scale economic forces. Sometimes there is not much opportunity "supply" so the price of an asset is wildly bid upward and it seems immoral to not permit the owners to keep their windfall. However fundamentally everyone's about the same on average so the bidding process is really a selection system to award the asset and the obligation to fund the loan payment stream to the least financially responsible "winner". There's some economic term for this along the lines of auction winners dilemma. The guy who lost out in the bidding last place because he was only willing to pay $200K is ironically the guy most likely to pay the bank back its $200K whereas the "winner" who bid $400K to win is incredibly likely to default. Then add a bunch of social engineering such that we all earn equal chance at loans from a bank, and the inevitable result of a system with a pinched supply is the only people earning assets are the people very comfy with screwing the bank and people not willing to screw the bank are going to be eternal renters or homeless or otherwise asset free. So supply weakness freezes the people most likely to pay the bank back out of the economy. Then when it collapses, get the government to bail them out because who can imagine modern life without banks taking their cut?

Just saying, bubbles / relative lack of supply times are a really bad time to be a moral and ethical purchaser. You're either not gonna win and a crook will win, or you'll have to become that crook who willfully screws the bank.

Meanwhile centrally controlled low interest rates mean money is sloshing looking for any return, any. Everything higher return got financialized. So loan money is going to be aggressively thrown at those willing to take out large loans and pretend they'll pay back. A flood in the money supply due to low interest rates gets the same result in the long run as a pinch in worthwhile asset supply.

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

#118

Post by Terr_ »

klipt wrote: post #94
maxerickson wrote: post #81

Earlier quoted context omitted.

(And of course, bankruptcy has much in common with jubilees; not everything, but it implements the idea that debt shouldn't be forever)

The other end of the spectrum is debtors' prisons, which are such a terrible idea for multiple reasons that we've mostly gotten rid of them (except for situations like child support debt where self righteous indignation overrides good policy).

From a ruthlessly clinical evolutionary game-theory perspective... It's also that someone who spreads their genes by creating a child is obtaining a kind of "asset" for themselves, one which society can't transfer and won't morally destroy in retribution.

If A and B both invest in, say, a house, and B disappears leaving debts behind, at least A can sell the house and B isn't getting any ongoing utility from it.

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

#119

Post by guelo »

The PROMESA bill is disgusting. An unappointed board filled with bankster-friendly technocrats will now overrule democracy in Puerto Rico. The island is in for a generation of recessions and low growth as the entire economy will be permanently directed towards paying off bondholders.

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

#120

Post by bluetwo »

eagletusk wrote: post #111
SEJeff wrote: post #65

Earlier quoted context omitted.

What are your thoughts on Puerto Rico becoming the 51st State of the USA? I ask this as a native (mainland) born American who always thought this would be an interesting approach to solve the problem of finances in PR. Is it even well supported or is it a crazy idea?

Why would USA want PR as 51? What benefit is there? PR has more debt that California, and zero industry except for Bacardi rum. Name one thing made in PR?

Lots of our pharmaceuticals are made there due to favorable tax laws.
Post reply on HN