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

reuters.com

461–470 of 481 posts

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

#461

Earlier quoted context omitted.

I agree but that is not the case for most of this. People spend to much and run up to much debt because they are trying to keep up with the Jones. My wife was property manager for a large company. One of the properties in Orange County, New Port Beach area, had the highest rate of late payments and evictions. This is a A+ complex and has some of the highest rents for the units in the area. Guess what, those people th…

Do you have sources for your statement? If a bad borrower keeps getting loans then it's the fault of the lender. We have nothing to gain by putting such moral weight on bankruptcy.

So the bankruptcy is removed from your report after 7 years. It is really simple to get credit after a bankruptcy because you have no debt. Stupid I know.

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

#462

Earlier quoted context omitted.

I agree but that is not the case for most of this. People spend to much and run up to much debt because they are trying to keep up with the Jones. My wife was property manager for a large company. One of the properties in Orange County, New Port Beach area, had the highest rate of late payments and evictions. This is a A+ complex and has some of the highest rents for the units in the area. Guess what, those people th…

People are debt for all sorts of reasons, regardless of how you want to characterize it. Let's say your claims are generally right. But lenders are still willing to lend to people they probably shouldn't. And as long as they come out ahead overall they will continue to do so. Regardless of what anyone says to the contrary, we all want the world this way. When we need credit or a loan, we want it to be easy to get bec…

Wow. A personal attack. Way to make a point, not.

There is this statement that about 60% of bankruptcy are from medical debt. Here is a quick over view of that number:

http://www.snopes.com/643000-bankruptcies-in-the-u-s-every-y...

So lets say it is true (it likely is) then what are the other 40% from?

The problem I have with your statements is that you make the companies out to be evil. They should know better and not lend anymore is what you are saying. However how does that work? Should that 60% that filled for the pure reason that someone got really sick not be able to get credit later? Should we have 2 classes of the ability to get credit after bankruptcy? "Okay, well it was medical so no issues. Hey looks like you spent to much but you learned you lesson this time so I guess I will give you a loan. Hey you seem to have not learned your lesson so no loan for you." This is a slippery slope. How does a company value all of this? The answer is they cannot really. There is math behind the lending and it is faceless and has to be because anything else is subjective and could be discriminatory.

This is no different then:

"Hey you should put limiters in to only let the car go the speed limit."

"Hey you had enough soda this week. No more for you."

The company that lends the money can only profile on the finances and payment history. Anything else is really out of bounds. It is not the lenders job to KNOW that you cannot control your spending and they are not EVIL because they do not do so. They are not your parents.

You are blaming the company for something that is the persons responsibility. No one is saying that there are not bad situations were bankruptcy is required. All I was saying that doing it should not be easy. There is a reason a judge is required to rule on this.

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

#463

Earlier quoted context omitted.

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…

Thanks for your wonderfully comprehensive reply. I'm very interested in PR and would love to visit sometime but I really only know what I read in the newspaper. It's great to get a first-hand perspective from a lifetime resident.

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

#464
post #352

Earlier quoted context omitted.

I would say that your asking for a $1M USD mortgage with a $20k income would be reckless at best, and dishonest at worst. Yes, they're also at fault, but you're not blameless in that case. You have a personal and societal responsibility to spend within your means. To do otherwise causes damage to the rest of us.

It could though cause damage to his social standing by not overspending...

I don't buy it. If your friends judge you based on whether you have a nice car rather than your character and what you accomplish, it's time to get new friends.

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

#465
post #360

Earlier quoted context omitted.

It's not the "financial guys" forcing everyone to sign up for the huge amounts of per-capita debt we're now up to. People are doing that themselves out of their utter lack of self-discipline to save money instead of buying a stupidly overpriced SUV or pickup truck. And the housing market really went off the rails because people were making stupid bets. Does the casino enable stupid bets? Damn right. But we don't blam…

When I got my mortgage (c. 2006) I had an idea of what I could afford. I went to the bank hoping they would approve me for that much. Not even taking into account my wife's salary, they approved me for at least $100k more than that. There is no way we would still have our home if we took the bank's advice. Sure, people make bad decisions. But how can they be expected to make better ones when the people that are suppo…

Good on you for making your own decision rather than outsourcing responsibility to a company that clearly doesn't have your best interest at heart.

Who has ever said that banks are supposed to be relied on for good advice? Hire an accountant for that, the banker works for the bank, not you.

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

#466
post #360

Earlier quoted context omitted.

It's not the "financial guys" forcing everyone to sign up for the huge amounts of per-capita debt we're now up to. People are doing that themselves out of their utter lack of self-discipline to save money instead of buying a stupidly overpriced SUV or pickup truck. And the housing market really went off the rails because people were making stupid bets. Does the casino enable stupid bets? Damn right. But we don't blam…

> Does the casino enable stupid bets? Damn right. But we don't blame them when a gambler loses all their money on a stupid bet. I think the only reason for that is follow the money. Casinos pay taxes. I'm trying to follow a machine learning mooc and I'm just realizing how much humans (specifically me) suck at classification and at pattern matching. Planet money I think asked the question: if sugar is addictive, why i…

Yep, like casinos, we should regulate banks to avoid allowing them to provoke the worst impulses in people. But at the end of the day, in the current environment, people need to be able to take care of themselves. Regulation should not be treated as a substitute for discipline.

And I agree that sugar should be regulated and taxed, or that we should at least do more to educate them on how destructive it can be to health.

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

#467

Earlier quoted context omitted.

I was wondering this too, who is exposed, by how much, and are those entities publicly traded now? In the Detroit one, bond holders were able to get back .75c on the dollar[0], and I suspect the haircut here will be worse for bond holders. [0] http://www.barrons.com/articles/seven-lessons-from-detroits-...

See my response above for links :)

WSJ just released this today too: https://www.wsj.com/articles/who-are-most-exposed-to-puerto-...

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

#468

Earlier quoted context omitted.

Exactly. If you'll excuse me highlighting the obvious, the floor-mopper in Puerto Rico is having to work just as hard as in some other place where the economy is better, so there is a transfer of wealth from that person that's generally not accounted for.

That assumes that the person's work has an inherent value, and further that this inherent value is equal to the highest amount it can be paid in any market. That hardly seems reasonable. Consider two countries, A and B. A has limited economic development, low technology, poor infrastructure, low education. B is far more advanced. A and B lie on opposite sides of the globe and have essentially never had trade or direc…

I'm looking at it from a different perspective: to stick with your terminology, Pa and Pb must both expend the same time and effort to mop the floor, so their costs (in terms of physical energy expenditure) are identical.

You are correct about the greater transfer of wealth going to Pb, in that if Pb visits country A, s/he will have vastly greater purchasing power and thus economic opportunity (is s/he wants to settle down there) than the reverse situation of Pa going to country B.

Consider the possibility, in these days of globalization and corporate reach, that both are employed by the same firm, such as Walmart of 7-11 (let's forget about franchising and other specific details and consider only the obvious labor cost variations).

So now we have two employees, working for the same entity in different contexts, doing the same amount of work, and enjoying the same amount of purchasing power in their local economies - but very different levels of purchasing power if they wish to visit each other, which asymmetry will inevitably be compounded over time.

My basic point is that it's a matter of luck whether you are born in country A or B, but ceteris paribus there will be a significant and increasing opportunity gap through no fault or merit of the individuals involved. This is in my view a Bad Thing.

I am sorry for not laying this out more clearly, and by using the phrase 'transfer of wealth' I may have obscured my point. I agree that Pb primarily benefits from the whole economy of country B, but invite you to consider the low and inevitably worsening bargaining position of Pa (and by extension, the whole of A) in any kind of international transaction.

Is A a worse country because of some moral deficiency? Absent a specific and obvious cause, that conclusion might be the result of a 'just world fallacy.' Regardless, this is of little comfort to Pa, who can hardly be held morally responsible for the past failings of the society in which s/he originates.

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

#469

Earlier quoted context omitted.

That assumes that the person's work has an inherent value, and further that this inherent value is equal to the highest amount it can be paid in any market. That hardly seems reasonable. Consider two countries, A and B. A has limited economic development, low technology, poor infrastructure, low education. B is far more advanced. A and B lie on opposite sides of the globe and have essentially never had trade or direc…

I'm looking at it from a different perspective: to stick with your terminology, Pa and Pb must both expend the same time and effort to mop the floor, so their costs (in terms of physical energy expenditure) are identical. You are correct about the greater transfer of wealth going to Pb, in that if Pb visits country A, s/he will have vastly greater purchasing power and thus economic opportunity (is s/he wants to settl…

You are assuming that everyone is entitled to an equal share of the wealth of the world, irrespective of who produced it, and why.

First, this is at least as strong an assumption as the just world hypothesis, and at least as poorly supported. As it happens, invoking the "just world fallacy" is usually a sign that one is about to commit a fallacy that is just as bad. In fact, I would say it is worse, from a series of theoretical and practical considerations.

In my previous comment I have already shown an example of how your hypothesis (I am going to be charitable and not refer to it as a fallacy) leads you to a paradox. But there are many more.

Consider people born at different times of history. Do people who were born in the past suffer an injustice from the people who live in the present? "Well, but I can't do anything about it." Not for the ones who were born two hundred years ago, but what about fifty? You are clearly a young guy. Maybe even more of your income should be taxed and given to the baby boomers, to compensate them for the injustice of having been born in an age without the internet. (This is starting to look like a just world hypothesis applied to the system of defined benefit pensions...)

It gets worse. Demographically, socialism is the ideology of bourgeoise youths who hate their parents. Psychologically, its root is the rejection of one's parents, and of the advantages received from them. Therefore, guilt for "unearned privilege". But while it is true that the child did not earn the privilege, it is not true that it was not earned. It was not earned by the child, but it was earned for him, by his parents. (It is not a coincidence that adults, and especially married people, are more likely to be conservative.)

So try putting yourself in the shoes of the people whose work produced that wealth, which their children now inherit. Do they not get a say in who gets it? (Remember that they are already suffering from the injustice of being born in the past, so by denying them a say we are adding injustice to injustice.)

And of course, it does not stop at material wealth. There are all sorts of advantages (or disadvantages) one inherits from one's parents, in terms of education, social network, genetics, and so on. The family is the fundamental unit for the generation and transmission of inequality. Which is why the early socialists, who were intellectually honest, made it their explicit program to abolish the family.

Of course, there are many social problems with destroying the family. But there are also economic problems! Being able to transmit wealth to one's progeny is an extremely strong incentive for economic activity and growth beyond pure self-sustenance. In fact, property and inheritance are universal to all developed human civilizations: all of those proto-communist tribes anthropologists found never got much further than the stone age. The most likely conclusion is that they cannot: property and inheritance (in other words, inequality) appear to be an essential social technology that is required for development. The best a communist can hope for is that they may become unnecessary at some later stage of technological super-abundance, when we can all go off and play cowboys in space.

But we ended up focusing on economic factors again. Your idea of equality has much broader implications, though. If you say that the luck of one's birth is injustice, you cannot limit that to wealth. Differences in intelligence are unjust. Differences in attractiveness are unjust. We could go on and develop all the implications, but I'm going to stop here.

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

#470
post #216
post #150

Earlier quoted context omitted.

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.

Your "genetic future" immediately gets diluted and is barely recognizable after a few generations. A memetic legacy can last much longer.
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