241–250 of 481 posts
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Assets provide return on investment. Children do not. Using this term just muddies the water.
The only investment a human can make is in their genetic future. Everything else (money, power) is in service of that.
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Not always. The US technically defaulted on its debts when we dumped the gold standard. Luckily for us, we were still the biggest global super power so we were able to tell everyone to just suck it. For reference, there's an estimated $7 Trillion in gold in the world and the US is now $19 Trillion in debt.
And the upside is that the economy is much larger than it could ever have been while stuck on gold.
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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…
Hasn't that ship long since sailed? One of the first "shameless" local bankruptcies of significant scale in the U.S. was that of Orange County, CA, a wealthy conservative suburb of Los Angeles, in 1994. They could have paid off their debts if they had wanted to, but their voters did not want to, and repeatedly voted down tax hikes to rapay the bonds. So they defaulted in 1994. This county is still one of the richest…
When issues of local government financial problems come up, I think it's important to remember that local governments are typically not able to undertake deficit spending the way the Federal government is. If the US Federal government were prevented from running a budget deficit, we'd likely see a lot more solvency issues and financial failures of many sub-organizations within government due to bad budgeting. It woul…
Very true. Puerto Rico is a look into the future. Illinois and other states are <20 years away from the same fate.
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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…
Countries pay back loans because they like to keep a good reputation for future loans, but this does not work in a situation where there is nothing to lose since you can't service loans anyway.
(Of course banks can enlist other states to do strong-arming: See eg Greece who were pressured to accept a deal worse than default to benefit foreign EU banks)
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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.
The short version is that a lot of the debt is held by the people of PR themselves in form of bonds that were sold when the economy was good.
The reason it was artificially good is that for a long period it had great US tax benefits when compared with other US territories/states. During that time several corporstions (particularly pharma) had factories and jobs there. During that time there was a boom in bond sales - a lot of predatory practices that are reminiscent of the US housing bubble were done there, too. Once the tax loophole was closed, corporations left the island, jobs went to shit, the bonds could not be repaid, and all well, you get the picture. Except that in this case, "not paying debt", literally means not paying a huge chunk of all the life savings that people poured (arguably even patriotically) to their own bond system (see the parallels to the housing crisis?).
You could technically boost the enconomy there by reintroducing similar tax loopholes, but it would be a temporary fix, and there would be significant struggles in the Senate and Congress... Taxation without representation sucks big time...
Link to podcast:https://16683.mc.tritondigital.com/NPR_510315/media-session/...
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…
> 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…
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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?
Lol, it looks like the bankrupts are allowed to write HN comments from bankruptcy court.