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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

#311

Post by jpttsn »

zeteo wrote: post #80
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?

Minimum wage only causes unemployment if the labor market is competitive. This is not currently the case in the US as a few big companies (Walmart, McDonald's) have disproportionate market power, and most economic sectors are becoming even more concentrated. Under such oligopsony conditions, increases in minimum wage will generally come out of profits (which are at historically high levels of the GDP [1]). Since wage…

> Minimum wage only causes unemployment if the labor market is competitive.

Where did you hear that?

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

#312

Post by entwife »

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…

Cheap flights would work even better if (1) given to people with portable/remote jobs that can be done in Puerto Rico and (2) it is actually a paradise, or at least in the view of people with portable jobs.

I could remote work from PR; have never been there, and it's likely not my style. But some of my co workers moved back home once it was allowed.

What are income taxes in PR?

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

#313

Post by wonderwonder »

myrandomcomment wrote: post #295
njovin wrote: post #194

Earlier quoted context omitted.

That sounds more like fraud. What if I take out a loan, am perfectly capable of paying it off, but the asset backing the loan has lost sufficient value so as not to be worth the continued investment? Is there any shame in defaulting and letting the lender suffer some of the consequences? In my personal opinion, no. Especially with secured or collateral-backed loans, the lender knew there was risk going in and there's…

Sorry but what you are saying is since people are too stupid to understand the contract they signed and to do some math it is the companies fault? My wife and I at one point were in the hole nearly 1m. The crash put my house way under and the job money fun time went away. It sucked. You know what we did. We canceled the cable TV, we stopped eating out. We watched every penny. I work jobs I hated, hated, hated. We got…

The companies are more than capable of doing the math as they are signatories on the same contract. They interest rate they charge on the loaned money is based on their own internal algorithm that determines the risk of default on a particular borrower. Risk is priced into the loan.

I am glad you and your family were able to work your way out of the debt you found yourself and I commend you for it. Many others are not able too. Provided they did not get themselves into debt just to keep up with the Joneses' while living on credit cards, they should not be ashamed or made to feel stupid for taking advantage of a legal option that has been priced into their loan via their interest rate.

You talk of doing the math and taking a bet on your loan. The lenders do the same math and take the same bet. They just don't apply any moral imperative to their actions.

Life happens, and at the end of the day their is no shame in looking at the math and your situation and determining that the numbers don't add up and its time to reset.

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

#315

Post by sandworm101 »

jpttsn wrote: post #303
sandworm101 wrote: post #101

Earlier quoted context omitted.

This isn't about a social norm. This isn't about non-payment of debts generally. This is about a very specific and narrow type of loan. The creditors here chose a risk. They could have insisted on security. They could have asked for collateral (ie the deeding over of a property right for a mortgage). They did not. They extended credit on nothing more than a promise and in full knowledge of bankruptcy laws. They also…

> If someone has no hope...bother trying Could it about setting an example? Showing the lost case a hard time might scare others into good behavior.

Yes. By allowing investors to realize an actual loss we train future investors to not be so careless with thier money.

These are two-sided contracts negotiated between adults. It is not the role of government to always side with one type of party over all others. The risk of loss is a cornerstone of investment. So too is the concept that one may borrow without risking a lifetime of punishment should the venture fail.

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

#316

Post by brandonmenc »

givinguflac wrote: post #307
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…

|Default is an option specifically written into every debt contract out there. Except student loans :(.

You can default on student loans.

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

#317

Post by rovr138 »

anigbrowl wrote: post #124
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…

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…

What I would love to get from this, is an open government.

I can't trust the government on the island. We got in the mess because of them. They've been slowly getting us more in debt. They've lied. It wasn't until the island was $70 billion dollars in debt that they came out talking. And now we have the son of the most governor that had the most people investigated by the FBI.

I can't blame him for the actions of his dad. But I can't trust the government.

I can't trust that they will bring in a firm to analyze the debt and be fully transparent. The government is the client of the firm. There will be NDA's in there. They will have a statement somewhere with something like, "with the data/access we've been provided, this is what we understand..."

I can't trust it.

If we can get our hands on the data. If we can analyze it. If we can get experts on it. Publish everything and be transparent about it. We can make a non profit. Ask for contributions (so people are able to claim that) and analyze everything.

- How much do we actually owe? - What should we pay first? - Based on the terms, what has the highest positive/negative impact on the island? - From what we owe, what is actually legally binding? (apparently there are some terms that may not be 100% legal)

This is what I want. For us as citizens to come together and do this. For us to be able to answer our own questions.

But people just keep saying things along the lines of,

> We aren't happy with what you are doing, fix it. > We need this fixed. > We don't want the university or anything to get funding cut off, but fix this. > O'neill bellaco (something else going on on the island in regards to the mayor of a town regarding sexual harassment complains)

The people living in Puerto Rico, the people of Puerto Rico living outside the island, we all need to come together and at least analyze the fucking mess we are in.

Tenemos que resolver nuestros problemas. Pero para poder resolverlos, debemos analizarlos, entenderlos y tener un plan de acción. (We need to fix the issues. In order to do so, we need to analyze it, understand it, and have a plan to execute).

We need the data. Even if they make some law where they pardon everyone involved/implicated in issues because of it, we need the data to understand the mess we are in.

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

#318

Post by prostoalex »

_delirium wrote: post #224
savanaly wrote: post #23

Earlier 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…

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…

Considering that Orange County default was caused by local government's mismanagement of the public funds (via highly risky strategies and derivatives that had been banned since then), you can kinda-sorta-maybe see why the citizens didn't exactly line up to give even more of their money to the local government.

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

#319

Post by altstar »

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.

Why would you try socialism in those countries?

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

#320

Post by rovr138 »

Steko wrote: post #192
chamakits wrote: post #125

Earlier quoted context omitted.

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 compl…

> So far, past votes, the results are no. Technically the 2012 vote was 'yes' but all of the votes so far have been framed poorly. And that includes the upcoming one, which is likely going to make it a waste of time; Puerto Rico needs a simple and clear referedum on 'Statehood Yes or No'.

Which makes sense. Was the 2012 the one with a question in the form of,

"Are you okay with the current status or do you want a change?"

Because we ALL want a change. First, we want to know what the actual current status is. Then we want to know our options.

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