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

reuters.com

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

#201

Post by vkou »

coddingtonbear wrote: post #190
vkou wrote: post #170

Earlier quoted context omitted.

> Why would USA want PR as 51? What benefit is there? Wasn't the USA founded on the principle of no taxation without representation? On a principle of enfranchisement? On a principle of self-determination?

Although Puerto Ricans do pay certain local and federal taxes, they do not pay income taxes like citizens of US States do.

They also pay full medicare and social security tax, but only receive ~15% of the medicare benefits they would be entitled to on the mainland.

The tax/benefits situation is complicated.

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

#202

Post by ellius »

vkreso wrote: post #197
Pxtl wrote: post #93

Earlier quoted context omitted.

Bankruptcy is perfectly normal for business institutions. Limited liability is the foundation of the entire stock market. It's a basic economic tool used for navigating choppy waters. We only attach a moral value to it when individuals and governments use the tool.

Apples and oranges. The effect of a government bankruptcy on the economy and the society (present and future) is not really comparable to the effect of a bankruptcy amongst individual economic agents. Those are completely different scales. Also, morality is always attached to anything which involves society and its institutions. For example, good faith in contracts (bona fides) which has evolved all the way from the…

Without bankruptcy protections, what prevents companies from lending out an unlimited sum of money? Countries don't die. You can't send them to debtors' prison. A lender could effectively sell a corrupt or stupid government unsustainable amounts of debt and then effectively put a lien on the country in perpetuity to get its money back. That hardly seems just towards the citizens, who committed no crime other than electing stupid leaders, many of whom might have been elected before they were even born.

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

#203

Post by sidmitra »

There is an excellent episode on the podcast Radio-Ambulante on exactly this. There're are accounts of a few people living there, small business owners etc. if i recall correctly

http://radioambulante.org/en/audio-en/debt

English translation: http://radioambulante.org/en/audio-en/translation/translatio...

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

#204

Post by vkou »

enraged_camel wrote: post #187
InitialLastName wrote: post #107

Earlier quoted context omitted.

Venezuela tried petro-socialism, backing their welfare state with a single resource that they happened to be swimming in. Price of that resource false -> no more monetary value -> money is worthless and welfare state fails.

I'm not sure why you are being downvoted (probably for ideological reasons). You are totally correct. Socialism hasn't really been tried in countries with diverse, abundant resources and powerful economies.

It has been tried, we call that country 'The United States' - at least, if you're over the age of 65.

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

#205

Post by vkou »

cnnsucks wrote: post #95
toomuchtodo wrote: post #7

Earlier quoted context omitted.

I think the concern is overblown. States will need to backstop local governments, and the federal government will backstop the states. Benefits will get (mostly paid); taxes will go up (they have to, they're at unsustainable historic lows). This is not the end of the world.

Well that's not the precedent. When these mismanaged governments finally throw in the towel and hand the reins over to grownups what happens is the pensions and retiree benefits get cut. Detroit just had this happen after the state stepped in and dealt with that mess. Cleveland is in the process of cutting benefits before it goes bankrupt. CalPERS cut pensions last December for retirees from Loyalton. Same thing in t…

> When these mismanaged governments finally throw in the towel and hand the reins over to grownups what happens is the pensions and retiree benefits get cut.

What makes it appropriate to cut obligations to creditors we call pensioners, but inappropriate to cut obligations to creditors we call 'bondholders'?

(The answer is, obviously, that our politicians are quite happy to push our elderly under the bus, in order to protect wealthy investors.)

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

#206

Post by anigbrowl »

thaumasiotes wrote: post #196
anigbrowl wrote: post #186

Earlier quoted context omitted.

How about I have three shell companies, and you guess which one has the real source of my income underneath it? $5 to to win $10.

At least offer $15, geez. $5 to win $10 is a money loser even when you have income under one of the shell companies. :p

Hey I didn't get rich by being fair, and you can take that to the bank.

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

#207

Post by analog31 »

cbr wrote: post #139
ryandrake wrote: post #108

Earlier quoted context omitted.

> But if we make it our social norm that bankruptcy is nothing to be ashamed of and to be taken lightly I don't know about "taken lightly" but bankruptcy and defaulting on a debt should not be something to be "ashamed" of, for an individual, a company, or a government. Default is an option specifically written into every debt contract out there. There should be no more shame in choosing to default as there would be f…

I'm pretty sure taking out a loan that you intend to default on is fraud, but making a contract with someone that you expect to be very profitable to you is not.

If I were to look for fraud anywhere, I'd start by looking at the people who give inflated ratings to bonds.

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

#209

Post by martinald »

dustinmr wrote: post #198
zeroer wrote: post #183

Earlier quoted context omitted.

Wait. I though Puerto Ricans were only exempt from federal income tax on Pueto Rican-sourced income.

Here's a local law where if you meet all the criteria (income made off the island, spend > 180 days per year here, various other criteria), you're exempt from income taxes here. And since you're a resident, all your income is here. Effectively exempting you from federal income taxes. The idea was to attract high net worth individuals to spend money here. Every analysis I've seen says it has worked quite well.

Crazy. So if you move to PR but making money from other US based interests you get exempted from US federal income tax, but if you move and work permentantly in say Germany, you still get charged US Federal Income tax?

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

#210

Post by tanderson92 »

ellius wrote: post #202
vkreso wrote: post #197

Earlier quoted context omitted.

Apples and oranges. The effect of a government bankruptcy on the economy and the society (present and future) is not really comparable to the effect of a bankruptcy amongst individual economic agents. Those are completely different scales. Also, morality is always attached to anything which involves society and its institutions. For example, good faith in contracts (bona fides) which has evolved all the way from the…

Without bankruptcy protections, what prevents companies from lending out an unlimited sum of money? Countries don't die. You can't send them to debtors' prison. A lender could effectively sell a corrupt or stupid government unsustainable amounts of debt and then effectively put a lien on the country in perpetuity to get its money back. That hardly seems just towards the citizens, who committed no crime other than ele…

Well, credit ratings prevent them.
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