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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

#281

Post by thehappy »

knob wrote: post #20
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…

I will admit that you are right on that. It's a tough spot to be in. I bought, and yet to fully read, "Debt - The first 5000 years". One of the things the book states at the start is what you are saying: Not every debt has to be paid off. One of the risks creditors take is the possibility of having a debt not paid back. I also remember how Haiti was, to this day, punished via monetary means. Haiti wanted freedom? Fin…

> Another example from the book: Madagascar. The French invaded, and took out their Queen. Then imposed taxes on the population as to get back the money they invested in the invasion/war. wtf

That's a leveraged buyout. Borrow money to take control of another entity. Use revenue from the target entity to pay that debt. Profit.

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

#282

Post by paulddraper »

xmlblog wrote: post #115
mjevans wrote: post #70

Earlier quoted context omitted.

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.

But we haven't tried it.

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

#283

Post by Laforet »

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…

Indeed. In 1825, France demanded a sum of 150 million francs to be paid by Haiti for the loss of French property during the war two decades ago and threatened miliatry invasion in the event of non-payment. The sum was later reduced to 90 million francs and paid in installments until 1947, some 120 years later. Many believed this debt to be the thing that crushed any prospect of development in Haiti's early history as an independent country.

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

#284

Post by thehappy »

rburhum wrote: post #248
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…

The problem is the the holders of the bonds are largely the people of PR themselves...

I'm really skeptical of this claim. Source?

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

#285

Post by thr0waway1239 »

BatFastard wrote: post #264
6stringmerc wrote: post #35

All that text about Puerto Rico's financial difficulties and not one mention of the rampant fraud that spun up the debt from a reasonable amount to the $XB that is likely to default is the result of graft, corruption, and fraud enabled by many US and international actors. Want to take a guess how many of those responsible for the transactions, debt issues, and back-office fund transfers are in jail and all their asse…

How far does the graft and corruption have to take from us before we start publicly hanging them by their genitals?

All through history, the feeble voice of economically rational people has been no match for vociferous demagoguery. What I mean is, people will actually identify the source of the problem 50 years too late, and usually when all the primary actors are long gone. During the problem, everyone will vaguely sense that something is going wrong, rarely listen to the voices of restraint while the problems are being created, and ultimately the demagogues will blame everything on someone on the outside and take the insiders to war. The amazing thing here is, you don't even have to talk specifics. This movie script plays out over and over and over.

So the answer to your question is that it is never going to happen.

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

#286

Post by furyofantares »

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…

> won't it change the equilibrium for future generations of lenders and borrowers such that an inefficiently low amount of lending goes on

Yes, at one extreme, nobody ever pays anything back and no lending ever happens.

But at the other extreme, everybody always pays their debts and the bankers asymptotically approach ownership of 100% of the money.

I think we are closer to the second extreme than we should be.

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

#287

Post by natermer »

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…

It's a lot easier when you are allowed to make your own money.

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

#288

Post by deepnet »

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.

Post WW2 UK elected a socialist government which created the welfare state, comprehensive schools, state pensions and the National Health Service and nationalisation of some industries.

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

#289

Post by kmc059000 »

hkmurakami wrote: post #38
6stringmerc wrote: post #35

All that text about Puerto Rico's financial difficulties and not one mention of the rampant fraud that spun up the debt from a reasonable amount to the $XB that is likely to default is the result of graft, corruption, and fraud enabled by many US and international actors. Want to take a guess how many of those responsible for the transactions, debt issues, and back-office fund transfers are in jail and all their asse…

Would love to read more on the subject if you have links to both the PR and Dallas situations handy.

Here is an article on the Dallas pension problem. http://www.economist.com/news/finance-and-economics/21711335...

The gist as I understand is that pensioners were promised a 8.5% return (which didnt happen) and (some?) retirees are able to withdraw their current value in their pension in full. There is talk of reducing benefits, which is causing a situation much like a run on banks to occur.

I've seen a few proposed solutions such as having the state of Texas help pay, to pillaging funds from DART (public transit), to tax increases.

It is a complete mess, and PR must be in such a bad position. In Dallas' case, it is obviously corruption that caused the problem, with no penalty, and the only recourse is to penalize those that did not cause the problem. Seems like PR is in a similar yet more dire situation.

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

#290

Post by debacle »

pryelluw wrote: post #275
debacle wrote: post #266

Earlier quoted context omitted.

Do you have any recommendations for first-time visitors? Apart from Culebra we have no idea what we want to see.

Absolutely. Go to the west side to Cabo Rojo. Eat some great fresh seafood. Then head to Lajas (15 min drive) at night to see the bioluminiscent bay (wear jeans and bring mosquito repelent). Then go to the east side and end up in Fajardo. Visit El Yunque and then eat some local delicacies in los kioskos. After all that, call me, and Ill take you to my dads hacienda where Ill serve some rice and beans while you relax…

How much Spanish should I try and pick up? Will it help?
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