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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

#471

Post by hueving »

Consultant32452 wrote: post #239
cgio wrote: post #234

Earlier quoted context omitted.

Why would you tie an economy's capacity with the limited supply of a good? These trillions of debt (could) have created equivalent value in infrastructure, education, military power etc. The fact that the gold equivalent of what amounts to a whole economy does not exist is not an indication that the value is not there in the economy.

I didn't make any value statements on whether or not I think an asset backed currency is preferable. I just pointed out that the US defaulted on its debt when we told the world we weren't going to pay them back what we promised.

"we"? The US abandoned the gold standard in the 1930s. The "we" that promised anything is long dead and has nothing to do with the "we" (US citizens) now.

A citizen today is no more accountable for actions taken that long ago than for actions taken 4000 years ago.

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

#472

Post by sctb »

unprepare wrote: post #413
myrandomcomment wrote: post #295

Earlier quoted context omitted.

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…

>were in the hole nearly 1m >We canceled the cable TV, we stopped eating out cable is what 200/month max? 2400 /year? How the hell much were you eating out that changing your habits allowed you to pay off a million dollars worth of debt? You sound more financially irresponsible than people whose mortgages were underwater by orders of magnitude

Please don't be so personally rude to other users.

https://news.ycombinator.com/newsguidelines.html

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

#473

Post by kmc059000 »

LeifCarrotson wrote: post #404
kmc059000 wrote: post #289

Earlier quoted context omitted.

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…

Offering recourse to the pension-holders will clearly require penalizing groups that did not cause the problem. But can't we also penalize those that made the un-keepable promises and mismanaged the funds? This won't make the policemen financially whole, but it would offer at least some sense of justice, and, more importantly, send a message to others currently operating similar schemes.

I'm not sure that is possible and I question if their actions were illegal. Investing is risky and when actual returns did not beat the guarantees, the investors decided to invest in riskier assets to attempt to make them whole. However I'm not excusing their behavior and they are clearly to blame. There was also questionable behavior but I'm not sure how illegal it was.

And if their actions were illegal, I wonder how many people were involved and able to be prosecuted. I imagine there are many, from investors to politicians, and thus an expensive endeavor for the city and state.

I think the best thing is to prevent this from happening in the future by monitoring and exposing these shenanigans early rather than before it is too late. Cities and states with pensions should take note of Dallas' problem and act accordingly. Contracts should include clauses for penalties and recourse so as to allow civil lawsuits.

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

#474

Post by candiodari »

analog31 wrote: post #207
cbr wrote: post #139

Earlier quoted context omitted.

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.

What about politicians that use the government to take action against firms when they lower particular ratings ?

Are those committing fraud too ?

What, incidentally, about politicians who force pension funds to buy bonds "they like" by legal means ? (at least 200 politicians in current service are guilty of this)

These are US government bonds, by the way, if a default happens with them, the sort of organisation that will suffer the most is US pension funds.

[1] https://en.wikipedia.org/wiki/United_States_federal_governme...

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

#475

Post by candiodari »

YesThatTom2 wrote: post #414
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…

Whoa whoa whoa! If people default, then bankers might actually have to work for a living and actually evaluate potential customers instead of just cargo-curling their way through forms and praying that everything will be ok. The C- students that became bankers can't be expected to actually work for a living! (Sarcasm)

The largest owners of US government debt are US pension funds. This situation exists mostly because politicians demand they get to pick what the bankers invest in (at least 80% in "safe" instruments, ie. from a short list with government bonds).

Also how to resolve this situation ? You do want a pension, right ?

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

#476

Post by candiodari »

jacobush wrote: post #393
xamolxix wrote: post #349

Earlier quoted context omitted.

> See eg Greece who were pressured to accept a deal worse than default to benefit foreign EU banks how are they being pressured?

If they don't agree, they will get booted from the Euro currency cooperation. Then they can't issue bonds in Euro. Would have to use their own currency - and that currency would not be in high demand. What would you use it for? Buy olives? Nah, export companies would rather be paid in Euros, dollars or just about anything else...

Just answering from an economic perspective:

> What would you use it for? Buy olives?

No, of course not. What government sells olives ? You'd use it to pay Greek taxes. Those you'll pay anytime you want to buy anything from Greece.

So it doesn't matter if export companies get paid in Euros, Dollars, or anything else. They'd still owe taxes in (presumably) Drachma and that would create a market for Drachmas.

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

#478

Post by giancarlostoro »

chimeracoder wrote: post #445
giancarlostoro wrote: post #410

Earlier quoted context omitted.

Jones Act and a couple of other things: https://www.bna.com/demise-puerto-rico-n57982074653/ Used to be that Puerto Rico was once upon a time #1 in manufacturing, Japan was #2. The USA and England followed. Something to think about. Puerto Rico exports out of the US more pharmaceuticals than California currently, or at least it did in 2015[0]. There's so much potential for Puerto Rico. We also have a lot of engineers…

> I think all Puerto Ricans are to blame as much the people as the politicians. We all always blame politicians but as a people we don't do enough. I can't think of a single thing Puerto Ricans could reasonably and legally do that would have fixed this problem. The inability to import/export things at reasonable rates has crippled the economy, and nothing short of federal policy changes (which Puerto Ricans cannot di…

I meant in regard to current problems. There is crazy corruption. Like how much some politicians and judges make after retirement, which was brought to court, but who hears a case when it's against a judge other than a judge?

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

#479

Post by Consultant32452 »

hueving wrote: post #471
Consultant32452 wrote: post #239

Earlier quoted context omitted.

I didn't make any value statements on whether or not I think an asset backed currency is preferable. I just pointed out that the US defaulted on its debt when we told the world we weren't going to pay them back what we promised.

"we"? The US abandoned the gold standard in the 1930s. The "we" that promised anything is long dead and has nothing to do with the "we" (US citizens) now. A citizen today is no more accountable for actions taken that long ago than for actions taken 4000 years ago.

Nixon was the one that put the nail in the coffin of the gold standard and defaulted on our debt. I don't see how it makes a difference how old our debt is if we're still paying the interest on it.

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

#480

Post by unprepare »

sctb wrote: post #472
unprepare wrote: post #413

Earlier quoted context omitted.

>were in the hole nearly 1m >We canceled the cable TV, we stopped eating out cable is what 200/month max? 2400 /year? How the hell much were you eating out that changing your habits allowed you to pay off a million dollars worth of debt? You sound more financially irresponsible than people whose mortgages were underwater by orders of magnitude

Please don't be so personally rude to other users. https://news.ycombinator.com/newsguidelines.html

The parent was disparaging millions of americans by calling them too stupid to read a contract and financially irresponsible, and i pointed out that his situation sounded more financially irresponsible than someone underwater on their mortgage. If they take offense to being called financially irresponsible im not sure how they justify calling millions of americans the very same thing.

that said, fair enough, i was more discourteous than i needed to be in getting my message across, i apologize for that.

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