Puerto Rico's Sovereign Debt Crisis

supposedly They will default very soon 

Have alwmakers in PR consiidered legalizing medical cannibis and growing at as a cash crop? With the pharmaceutical companies right there, a plan could be hatched to capitalize the agricultural project by the drug concerns in exchange for the processed cannibis to be marketed under their brand names.

In states where it has been legalized, it has become a very profitable industry, creating a huge boost to the economy. Colorado has raked in tens of $billions.

Living here in Colorado I can attest to it being a real tax revenue maker. We actually have a "pot tourism" boon going on here. Not sure what the long term social affects will be, but as far a tax revenue goes, it's been good for the state.

Government says to drug dealers .... If you pay us some protection money (tax), we will not prosecute you or arrest you and you can stay in business.

Not that different from the mafia going to a business owner and saying: If you pay us some protection money, we let you stay in business.

The main difference is that at least some of the money ends up in the Government bank instead of the mafia.

I fail to see much different, it is still a form of extortion and increases drug use.

I wonder how long is is going to take for the US to start taxing murder and child molestation. We have legalized just about everything that used to be immoral or a sin.

I guess I am in the minority, as ussual.

Rey, it has definetly caused an uptick in drug use here in Colorado. That's why I stated I 'm not sure what the long term social affect will be going forward. It's already hitting the schools pretty hard. We are so long forward to our retirement in PR. I just pray this doesn't spin out of control.

I'm talking about MEDICAL CANNIBIS. Putting the use of cannibis (which is a medicine) in the same league as child molestation and murder is beyond ridiculous.

The pharmaceutical companies are already in PR. Legalizing it would give both them AND PR a revenue stream they don't now have. And believe me, it can be a very lucractive one.

Stop being a debbie-downer and think outside the box.

I was in Colorado when the medicinal pot started. People afraid of going to jail would not use it before it was legal.
Now, the doctors, police, and judges do not have a good measure of how much is too much to drive. More people are using as it is not illigal and jobs are having an issue with it also.
We do things with out thinking of all the side effects and without being prepared to deal with the concequences.

In my opinion Mr. Putin is right about one thing, american has lost a lot of it morals. That is probably the only thing I can agree with him.

Soon we will be sending people to jail for being religious and interfeering with the rights of those that are not. Wait.... That is happening already.

It started as Medical Marijuana here and quickly turned to Legalized Pot. I'm all for the Medical aspect. I personally know two people who use it to aid in their Chemo recovery and it works great!

The law says no discrimination on the basis of race, religion, sex or national heritage. Nobody is sent to jail for being religious. They are sent to jail for disobeying the law.

Cannibis is a medicine. It's been used thoudans of years as such with centuries of documented history on its benefits, risks and effects.

As far as driving is concerned, there is no measure, even for alcohol, on how much is too much, although there is a lot of evidence to support the argument that pot smokers are safer behind the wheel than alcoholics. But again, we're not talking about pot smokers. Every state is different. PR can make its own measure, just like the rest of the US.

But you're missing the big picture, which is not about Puerto Ricans endulging in cannibis, but about the pharmaceutical companies AND PR getting together to make money by marketing medication that can be prescribed by health care professionals wherever it is allowed, not just PR. One of the largest segments of the population using cannibis medicinally is seniors. My mother (age 89) uses it in cream form to relieve pain in her knee. She lives in Colorado. She couldn't get it here in Georgia. With the baby-boomer generation going into the ache and pain stage, there's is a great market ready to be tapped, IMHO.

But that is just one option. PR can more aggresively market eco-tourism (It is one of only two Caribbean islands with caves, for example), using renewable energy resources to service the island (wind, hydro, even creating energy from waste, as is done in Scandinavia), capitalizing on its provincial history as having two World Heritage Sites, which is unique in the US (which is what originally atracted me to PR), where most of them are geologic, and not man-made.

PR as an island, and Puerto Ricans as a people have a victimization mentality, which is all about pointing fingers. This blinds them to potential, because all they can see are obstacles and reasons not to move forward, rather than opportunities. Why can't they get beyond that, take an objective look at what they have to offer and work on expanding that potential instead of sitting around and waiting for Godot to bail them out.

ReyP wrote:

I wonder how long is is going to take for the US to start taxing murder and child molestation. We have legalized just about everything that used to be immoral or a sin.

Rey, Murder and child molestation are crimes against others.  There is no crime against person or property in the case of drug use.  I hope you can see the difference.. 

Again, in a free society adults should be free to do things we may as individuals disagree with as long as it doesn't harm another.

The idea that legalizing drugs would lead to legalized murder and child molestation is preposterous.

David

I never said it was a crime against anyone.

I said more and more things are becoming legal and being taxed. Pot legalization was just one example of things being legalized and I wondered when the others would become legal and taxed.
I will not post about this issue anymore, it is too controversial.

I said more and more things are becoming legal and being taxed.

No you, didn't.

This is what you said: I wonder how long is is going to take for the US to start taxing murder and child molestation

Do you REALLY wonder, or did you just feel like saying something absurd?

FYI: For anybody on this forum who is a Trump supporter:

https://waragainstallpuertoricans.com/2 … erto-rico/

Cant count the chickens before they hatch but it looks like the comittee has passed the draft as is and it is being send for scheduling for a vote. It looks like it is likely it will pass. https://morningconsult.com/2016/05/25/s … se-markup/

FYI:
https://berniesanders.com/press-release … ttle-late/

Report questions whether Puerto Rico debt issued illegally

By DANICA COTO
Associated Press

http://hosted.ap.org/dynamic/stories/C/ … 2-10-07-11

SAN JUAN, Puerto Rico (AP) -- A commission created to audit Puerto Rico's debt is questioning the legality of government-issued bonds in a report released Thursday, saying the struggling U.S. territory might not be responsible for paying a portion of the money owed.

The report comes as the U.S. Congress is debating how best to help Puerto Rico as it struggles to restructure $70 billion in public debt. The island is widely expected to default on a $2 billion payment due July 1.

The commission, whose 17 members were in part appointed by Puerto Rico legislators, found in its pre-audit report that millions of dollars of debt might have been issued in violation of the island's constitution. They say that is significant because previous court rulings have found that some U.S. municipal agencies were not responsible for paying debt if it was illegally issued.

The 44-page report states that Puerto Rico has borrowed more than $30 billion to finance deficits since as early as 1979, though its constitution prohibits it from doing so.

The constitution also bars the government from issuing loans for more than 30 years, but the commission found that the government has long done that. For example, a debt was incurred in 2014 to repay debt from 2003, which was used to refinance a 1987 debt.

The report also said Puerto Rico is spending more government revenue on debt than is allowed by the constitution.

"A court may rule that Puerto Rico borrowed without authorization to do so, with the consequence that Puerto Rico may be barred from issuing further debt in the future to finance deficits, it may be forced to raise taxes, or alternatively, declare the debt unpayable for lack of authorization," the report said.

The report's findings are not final. The commission noted that it has not received any funds yet to carry a full audit as planned.

"The findings of this report prove the need to dedicate resources to this audit and start to reveal who holds the debt, how borrowed money was used and if it met constitutional and legal limits," said Roberto Pagan, the commission's president.

Puerto Rico already faces several lawsuits stemming from its debt crisis, and some say the report's findings could further complicate efforts to find a solution in time to avoid default. The U.S. House of Representatives is considering a bill that would allow for restructuring of some debt while creating a federal control board to oversee the territory's finances.

The House is expected to debate the measure in upcoming weeks, while the Senate has not yet considered the bill.

Well this is certaintly good news even if small, school lunch program to receive 17% more, more incentives for agriculture, maybe some development in Ceiba (where I plan to live) Roosevelt Road base. Check the article  http://www.apnewsarchive.com/2016/The-U … 4d0ac1c631

By the way, here is a site about the projects projected by the government for the area, I think most of it has fizzled out but interesting read (I can see a good chunk of the base from the property I am purchasing)
http://www.rooseveltroads.pr.gov

Looks like starting next Monday, the Supreme count may release their opinion in several cases, two of them very important to Puerto Rico.
Article here: http://cb.pr/u-s-supreme-court-expected … ng-monday/

I was just Laughing about an article where the FBI is trying to locate 8 Mayors over possible corruption charges.

Hope the FBI has many agents, they need to go after a lot more than 8 politicians and family members.

It seems to be pretty consistent among the locals I've talked with - they all blame corrupt politicians for PR's dire straights.  Openly state and blame that they have robbed the commonwealths treasury.

Just an observation from the gringo on the beach.

Well that Gringo on the Beach needs to get involved in the island politics, it is your home now, maybe run for Mayor, there may be a lot of empty seats soon.

Puerto Ricans either like corrupt politicians or are terribly naive. Marco Rubio won the Republican primary in PR -- Now here is a a guy who is being investigated for laundering money through PACs derived from Nicaraguan drug trafficking.

While highly political, they tend to be naive and not worldly, many never left the island.
At least in my opinion.

Not politics, just some information as to what is likely to happen in PR within the next 10 years and the relationship with the US. I have warmed up my crystal ball and is ready to go.

Well it looks like many things in the political environment of Puerto Rico and its relationship with the US are about to change.
1) Puerto Rico has been declared non-sovern at least from the point of view of being able to prosecute people that the Federal government has or is prosecuting.
2) The PROMESA bill was passed by a vote of 297-127 in the US House of Representatives and is going for a Senate vote in the next few days. Obama is extremely likely to pass it.
3) The governor of PR and many other politicians are going in front on the UN on June 20th to complain about the US and PR relationship as a colony (In international law colonies are illegal). However the US seem to have been ignoring dozens of previous resolutions about it, so who knows what happens.
4) It has become plain and clear to the PPD (Partido Popular Democratico) that the current commonwealth agreement does not hold water and the party has to change or die.

The following options are on the table, they could affect you or not depending on which option the people select.
a) Statehood - In the realm of the other political party the PNP (Partido Nuevo Progresista) which wants the island to become a state. There is a debate as if congress will allow it or not even if the island were to choose it. If it happens, there is little change for US expats, you have Federal taxes and state taxes in PR. While today you may not pay PR taxes, you are likely to pay them if it does become a state. Also English would predominate over time.

b) Indépendant - Several tiny parties would need to grow primary from a lot of PDP former members. This is the potential danger to US interests and expats. Depending on the form of government it could be smooth or ugly.

c) Free Association - Where PR would be a separate country with a renewable 30 year contract with the US for its defence, military bases, commerce, and free entry/exit to the island. US Dollar would continue and americans can come and go as they choose, set businesses, own property. A treaty similar to the Marshall island is likely to be the outcome https://en.wikipedia.org/wiki/Marshall_Islands

In my opinion option C, the Free Association is likely to be the outcome for the following reasons.
a) The PPD members would be fairly comfortable here so likely to move en-mass to this option, the President of the PPD has made clear that the PPD has to make changes to its mission and find some way to exist. By the way the PPD is the largest party in PR by a small percent.
b) Members of multiple but super tiny independent oriented political groups are likely to join. The Free Association while renewable has a term limit, so once PR is well on its way, it can switch to full and complete independence if it so desires. They know that if PR becomes a state they will have no chance of ever becoming independent. So it is Join for now or die as a political organisation.
c) If PR does well under this system the people will see no reason to change so they are likely to renew over and over again. PR population tends to be settle down to something and as long as the pain is not too bad, they will not change.

If you think that things will develop in a different way, please feel free to say so, however like I did above, lets keep actual politics out, be an observer seeing a pattern and tell us what you see as the likely movement. We are here to inform and help others make decisions and today there are major changes occurring that could affect our expats.

Please note that the above relationship or non-relationship possibilities does not necessarily means a specific form of government.

Interesting news today.
The governor just signed into law incentives with the idea of developing a ship repair industry (I assume big ones). The news mention the dry docks in San Juan an Ceiba

According to the news they think PR is a great location for this type of industry with a potential of thousand or more new jobs.

This just incentives in the hope investors participate.

There is also interest in creating a merchant navy service in Puerto Rico, but the issue of the Jones act is currently in the way. The thought is for PR to use its own ships instead of the mainland ships from Crawley and others. Not enough incentive right now, but that may change.

Bad idea. PR has no access to cheap energy or steel. Right now, it's not economical to even recycle steel cans. It's Manos a la Obra all over again. Since it's not economical but the government wants it, they will subsidize this losing industry, accomplishing nothing but shoveling taxpayer money into the usual pockets and putting PR even more in the hole.

What we need is to move out of colonial/Soviet-style centralized attempts to orchestrate the economy and give the very innovative people of PR half a chance to exploit the real economic opportunities they spot.

All the native Puerto Ricans I talked to when I was there recently would opt for statehood. They don't want independence and they think option C leaves too much up to the political climate at the time any contract is up for renewal, making their future too uncertain.

As far as a ship-repair industry is concerned, I think it sounds way too ambitious, although I do think PR is well-situated for such an industry.

There are lots of other revenue avenues for Puerto Rico that make more sense, given its current state of affairs, if people put their heads together and think outside the box. It's perfect for developing clean energy alternatives, for example, and the excess energy produced can be sold to neighboring islands. I was also surprised to learn it has a fairly robust film and music industry, and it could do more to court studios and music companies into taking business there as opposed to Cuba and all its red tape.

The above was just a short version of a news article. Here is the article: http://www.elnuevodia.com/noticias/loca … s-2226961/

English version?

Dont have it, maybe in a day or two they will translate

FYI: I just did some research, and apparently PR leagalized medical marijuana a year ago. Why aren't the pharmaceutical companies, many of whom already have a presence and equipment there, capitalizing on this cash crop?

In Colorado, where I am originally from, cultivation and sale of cannibis is raking in billions.

Don't know, maybe not all the ducks are in a row?
Maybe they are afraid they will get shot by the drug dealers?
Your guess is as good as mine.

Igustaf wrote, "All the native Puerto Ricans I talked to when I was there recently would opt for statehood. They don't want independence ..."

Though it has been a year since I was on the island, that was my experience as well.   Those who do want independence seem to think wistfully of Cuba, and as more and more learn what life is like on that island for the average person, fewer and fewer want it.  Those who want statehood seem to believe that with statehood the island's debt will magically vanish, while all everything else remains the same.  Both sides are deluding themselves.

The problem is that the power is in the hands of the U.S. Congress, and there is no reason for Congress to grant Puerto Rico statehood.  If it did, the U.S. Government would be on the hook for $70bn in debt.  Why on earth would the Congress agree to that? It is also unlikely that the Congress would simply cut Puerto Rico loose.  Remember that these are all U.S. citizens.  We can not unilaterally strip them of their citizenship -- if you think the flight to the mainland is bad now (and bad for Puerto Rico), imagine all of those U.S. citizens who would flee the island to the safety of the mainland.

So what will happen?  Nothing.  Don't expect the Congress to change the sovereign status of Puerto Rico, because neither statehood nor independence is better than the status quo, from the perspective of the Congress.

Now, given this, my crystal ball suggests two things.  First, the short term is bleak.  Expect continued flight from the island of those who can find gainful employment on the mainland, further eroding the tax revenues.  Those who remain will either be in low-skill service industries or tourism.  All the rest will likely find themselves in the "shadow economy" -- cash for services.

In the longer term, what I would hope for Puerto Rico are two things.  Domestically, the Government Development Bank must be either dismantled or restructured in such a way to both prevent it from lending money for government projects while providing it the means to resist pressure from the PR government to do just that.  A government that can loan itself money will bankrupt your children as sure as the sun will rise in the east.  On the mainland, Puerto Rico needs incentives for entrepreneurship.  This means at a minimum three things.  First, repeal of the mercantalist trade restrictions imposed by the Jones Act to allow PR to trade regionally and internationally.  Second, a waiver from the federal minimum wage.  Mainland business is not going to re-locate to the island when labor is cheaper in Mexico, or Asia.  Third, tighten the eligibility for Social Security disability payments to make it less likely that able-bodied Puerto Ricans can be disabled and simultaneously work in the shadow economy.  The problem here is that I see none of these things happening -- all have their entrenched stakeholders.

"Maybe they are afraid they will get shot by the drug dealers?"

Oh, please. It hasn't happened in all the other states where it is legalized.  The dealers would just take their business elsewhere.

My guess is that the pharmaceutical companies don't want to cannnibalize the big-buck drugs they already have on the market. 

A smart entrepeneur would buy one of the drug company's existing, largely abandoned, buildings and start up a business processing, marketing and distributing medical marijuana grown on the island.

How can that not be a win-win?

lgustaf wrote:

FYI: I just did some research, and apparently PR leagalized medical marijuana a year ago. Why aren't the pharmaceutical companies, many of whom already have a presence and equipment there, capitalizing on this cash crop?

In Colorado, where I am originally from, cultivation and sale of cannibis is raking in billions.

Sorry, not so.  Sale of the crop last year in Colorado was just shy of $1bn, tax receipts in 2015 were $135million.  Hardly enough to get Puerto Rico out of debt.  And Colorado has a population of 5.3 million with an average poverty rate about 12%, while Puerto Rico has a population of about 3.5 million with an average poverty rate of 46%.  Dope isn't the answer to Puerto Rico's debt problem.

Here it's a link to a similar article, this time in English but different newspaper. http://caribbeanbusiness.com/puerto-ric … -industry/

Related story about management of ports http://caribbeanbusiness.com/tote-teams … -operator/

I never said it was the answer, Warner. And since cannibis was legalized in Colorado, it has raised $billions. In 2014, it was $700,000. 2015 $1 billion.  Sales to date for 2016 has already reached $1 billion.

I don't know what the poverty rate has to do with it - not all users live in Colorado, and the cultivation, processing and sales has put many to work and prompted the creation of many small businesses. My mother purchases the medical salve she uses on her kneww from a recent start-up that now has a line of creams and ointments for medicinal use.

And BTW: it's cannibis, not dope. Cannibis comes from hemp. The legal cultivation of hemp and the products that can be manufactured from it, from medical marijuana, bible paper, bird seed, biofuel, mulch to apparel can make it a significant cash crop.

LIke I said, I didn't say it was the answer. Put it can be part of it and something that could be easily implemented very quickly.

lgustaf wrote:

The legal cultivation of hemp and the products that can be manufactured from it, from medical marijuana, bible paper, bird seed, biofuel, mulch to apparel can make it a significant cash crop.

To my mind, the current push to revive agriculture makes much more sense than heavy industry. The prices of the inputs are not inflated by the Jones Act and Puerto Rico needs the food security (I think something like 15% of the food consumed here is produced here, when the number used to be 85% before all the land was grabbed for "cash crops" -- another government initiative). Apparently, the land has been fallow so long that it can all be certified "organic" -- we have the spectacle of controversies about developing shopping malls on "prime agricultural land" that has not been used for agriculture in decades.

http://caribbeanbusiness.com/going-back … ck-growth/

I agree, Moto.

A greater enphasis on heavy industry without stiff regulation and environmental protections is not the way to go on an island.

Like you said, some fields have been fallow so long the soil is close to its natural state and any crops grown on it have tremendous marketability to a healh-conscious American consumer.  PR could start by plowing the golf courses Trump declared bankrupcy and stiffed his employees, contractors, and PR investors over.

Makes more sense for PR to capitalize on its natural resources (e.g. eco-tourism, green energy, natrually-gown crops, preserved history, wealth of artists, musicians). PR can be a leader in these endeavors, rather than a follower in others.. It has been done successfully on islands outside Scandinavia, and I was in Barbados recently, where a good percentage of the homes have solar water heating systems.