Debt: The Next 5000 Years
Puerto Rico files for biggest ever U.S. local government bankruptcy
121–130 of 481 posts
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#122I 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…
So the (selfish) question is: Is now a good or bad time to take a vacation in PR?
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#123Earlier quoted context omitted.
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…
Limited companies go bankrupt all the time. Do we consider it an "ethical failure" when some VC funded company folds, leaving a whole bunch of people they owe money to with nothing?
It's not an ethical failure because most of the participants understand that it is high risk/reward. That is why most start-up firms offer equity to their employees, and it is almost impossible for a new startup to borrow debt from banks (unless its personally guaranteed, or extremely expensive) before it has gained traction with its business model.
On the other hand, governments are perceived to be reliable borrowers, so they can receive low interest rate loans and are expected to repay their debt. There is not really a way for governments to issue equity like companies, so if governments become lackadaisical about paying their debts, then we should expect their loans to become much more expensive as well, and this could aggravate the financial distress of many high indebted public entities that are already struggling to pay the bills.
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#124I 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…
Two (heavily loaded) questions.
First: what you do with a debt is to you pay it off
Why? not all debts are created equal. Some contracts are unconscionable, and there's a related question of why people should be obligated on contracts that were negotiated on their behalf but in bad faith. I'm not saying that describes all of Puerto Rico's debts, but bad faith contracts are common enough that that they shouldn't just be passively accepted.
Of course I know this has been litigated a lot already and I don't expect you to start over that whole process from the beginning, but I'm always a bit skeptical of blanket moral assertions like this.
Second: I presume that, like most places, there are a lot of poor but more-or-less honest people who know little of complex business and governance affairs but are heavily impacted by them, to their economic detriment; and I presume further that there are rather fewer people who are expert at conducting such affairs, and have enriched themselves through this knowledge without having provided equitable value in return to those they have been dealing with.
Has anyone explored the idea of prosecuting the latter group and confiscating ill-gotten gains? While doing so risks infringing upon cherished concepts of property rights and due process if not conducted correctly, bankruptcy is a singular event that results from some breakdown or conceptual weakness of The Rules, and in collective contexts it seems only natural that the pain of bankruptcy should be distributed in approximate proportion to the pleasure that preceded the bankruptcy.
After all, one of the practical benefits of wealth is the ability to spend a lot of resources on placing procedural barriers between your wealth and anyone else who might want to make a claim upon it, whereas poor people are generally limited to hoping their door is strong enough to keep out wolves. The degree of legal or physical security you can afford is not necessarily correlated with the validity of one's moral claim on the property in question.
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#125I 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?
I was born and raised in PR, but have since moved.
100% of our politics surround this very question. The 3 mayor political parties are one pro statehood, one pro staying with the current status, one pro independence. The first two have always dominated, and only these past elections we had a candidate without a party make a dent in elections.
I'm saying all this to say, that the statehood (or lack of) is a very complex subject for Puerto Rico, both for real logical reasons and also for equally valid emotional ones.
To keep it simple though, statehood is a possibility, in as far as there may be a time where a majority may desire it. However, Puerto Rico doesn't really have much say on, other than voting to say if PR as a whole are in favor of it or not. So far, past votes, the results are no. But even if it's ever a "yes", we don't control it that happens or not. The US does.
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#126I 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…
Local here chiming in. Ive managed to work remotely for the past 6 years but have decided to move to the states. Anyone interested in an experienced Python/Django dev with an eye for product email me. Ive also been a tech lead as well. :)
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#127Earlier 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…
But if we make it our social norm that bankruptcy is nothing to be ashamed of and to be taken lightly
If? That's already how the USA is compared to most European societies. Our current President has been through a string of bankruptcies.
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#128Earlier quoted context omitted.
> 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…
Yet Puerto Ricans don't live in a Marxist society, so I'm not sure how his ideas apply here.
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#129Earlier quoted context omitted.
Limited companies go bankrupt all the time. Do we consider it an "ethical failure" when some VC funded company folds, leaving a whole bunch of people they owe money to with nothing?
It's not an ethical failure because most of the participants understand that it is high risk/reward. That is why most start-up firms offer equity to their employees, and it is almost impossible for a new startup to borrow debt from banks (unless its personally guaranteed, or extremely expensive) before it has gained traction with its business model. On the other hand, governments are perceived to be reliable borrower…
It's understood to be low-risk, but not zero risk.
Re: Puerto Rico files for biggest ever U.S. local government bankruptcy
#130Earlier quoted context omitted.
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.
If that were the issue we'd throw parents who give their kids up for adoption in debtors' prisons too.