Puerto Rico's Sovereign Debt Crisis

Great post with lots of boots on the ground info and also food for thought. I hope it works out for us and the natives but I fear not as rational thinkers might. Hopefully we will still get electric regularly (hahaha) so you can get the internet and survive. The rest of state supplied resources? Medical care PR version? Some semblance of order? Live off the land? I think Ricans maybe subconsciously saw this coming and was an earthy motivator in their mass exodus.

2016 Puerto Rico will be a very different place to live. Maybe only for the rich or the survivalists.

Or find a niche in the tourism biz.

One year ago, we foresaw this default scenario for Puerto Rico (with the contribution of Nomadlawyer). You can see the short forum exchange in the following link:

https://www.expat.com/forum/viewtopic.php?id=355747

Should I have a litttle time to write something about, I will share my thoughts of the Puerto Rican situation, based on my experience in Argentina.

Regards,

Miguel Mucci

dgdlaw wrote:

Great post with lots of boots on the ground info and also food for thought. I hope it works out for us and the natives but I fear not as rational thinkers might. Hopefully we will still get electric regularly (hahaha) so you can get the internet and survive. The rest of state supplied resources? Medical care PR version? Some semblance of order? Live off the land? I think Ricans maybe subconsciously saw this coming and was an earthy motivator in their mass exodus.

2016 Puerto Rico will be a very different place to live. Maybe only for the rich or the survivalists.

Or find a niche in the tourism biz.

Tourism is likely to go down the chute. Today hotels in PR are charging too much for their rooms and other services, driving more people to the Dominican Republic. Shortly Obama will open up Cuba on top of that. PR will have a hard time competing with both.

Next will be American industries moving to both of those Caribbean countries causing an outflow of the few jobs available in PR because they do not have a $7.25 minimum wage and will not have to deal with the upcoming $15 minimum wage. To add to the attraction away from PR, Also shipping charges are about 1/2 of what PR people and companies have to pay. See article: http://www.jonesactquestions.com/profes … -rico.html

Guys, You can only get so much water out of a stone, no matter how much you squeeze.

wpotvin wrote:

The bond holders will have to take a loss, but this has already happened.  Have you looked at the price of a PR bond?  Those holding them have already taken the losses and most bonds have been sold to speculators.  PR could settle all its debt for $35 to $45 billion not $72.

The original bondholders (typically institutional investors) had to sell the bonds at any price because the downgrades put the investment below their investment guidelines.  The "speculators" as you call them are NOT bound by any such constraints and are essentially the bond market equivalent of a patent troll whose sole objective is to be the biggest pain in the #$%^ possible to collect as much as possible for their investors.  Consider the Argentina speculators (bondholders) who came in and bought all the bonds at a big discount and then did everything possible to collect 100% of the principal and interest owing - because they could.  They refused to compromise with Argentina and placed the entire debt issuance in default (allowing lawsuit and collection efforts).  This is their business and their investors expect them to be aggressive and minimize the haircut.  So, these new owners of P.R. debt will be far more difficult to deal with than the original holders and will be far less willing to take much less than what is owed.  Allow the filing of bankruptcy by P.R. and their willingness to compromise will change. This is of course only my opinion.

dgdlaw wrote:

Maybe only for the rich or the survivalists.

I don't see how the "rich" would be willing to spend an average of half a million dollars on a Condado condo only to have regular (being redefined as conditions worsen from "occasional" to "weekly" to "daily" to "hourly") interruptions in basic services.  Lose the rich and it will be a country of survivalists and those lacking the ability to get out of Dodge.

I'm glad I started this thread - many excellent contributions. (And thanks for the cite, Miguel.) It goes to show how much people on this forum care about PR and want to see the place succeed. This is true of the both the commentators who praise and those who criticize the place (and often in the same post!).

More quickly then I had anticipated, the Republicans in the House of Representatives are taking seriously the question of applying Chapter 9 to PR. The Hill has a good write-up of the issues here. The proposals would authorize the government of PR to allow municipalities to file for Ch. 9 and for the state agencies to file for Ch. 9. I believe that would formalize the restructuring of about 1/3 of the $71 billion. But the Ch. 9 fix they're contemplating will keep PR as sovereign and therefore ineligible for bankruptcy. That leaves a lot of debt outside the bankruptcy process. And if the PR government were somehow empowered to file a Ch. 9 by Congress, the article cited above asks a very good question: How and who would be appointed to oversee the management of PR's government while it is forced to restructure a la Detroit? Is such a scenario realistic under the political circumstances? And would such a scenario be a usurption of PR democracy? And if no receiver is appointed, how can anyone expect the PR government to restructure itself?

NomadLawyer wrote:

I'm glad I started this thread - many excellent contributions. (And thanks for the cite, Miguel.) It goes to show how much people on this forum care about PR and want to see the place succeed. This is true of the both the commentators who praise and those who criticize the place (and often in the same post!).

More quickly then I had anticipated, the Republicans in the House of Representatives are taking seriously the question of applying Chapter 9 to PR. The Hill has a good write-up of the issues here. The proposals would authorize the government of PR to allow municipalities to file for Ch. 9 and for the state agencies to file for Ch. 9. I believe that would formalize the restructuring of about 1/3 of the $71 billion. But the Ch. 9 fix they're contemplating will keep PR as sovereign and therefore ineligible for bankruptcy. That leaves a lot of debt outside the bankruptcy process. And if the PR government were somehow empowered to file a Ch. 9 by Congress, the article cited above asks a very good question: How and who would be appointed to oversee the management of PR's government while it is forced to restructure a la Detroit? Is such a scenario realistic under the political circumstances? And would such a scenario be a usurption of PR democracy? And if no receiver is appointed, how can anyone expect the PR government to restructure itself?

You probably understand this a lot more than me, but unless PR gets an exception that other states do not have, the government and government agencies will not be able to file bankrupcy. Right?
So with out the exception but applying the law like if PR was a state, which debts will be eligible?

Good post. Very informative. So I have a small home in Rincon and am in the process of building another small home (on the same property). The home we are constructing is being built with as many energy and water efficient processes as possible. Obviously I have concerns for the island relating to crime,energy costs and the economy, but me feeling is that over the next decade there will either be major change in these areas OR the millions of "ex Puertoricans" will watch their island parents and heritage crumble into an abyss like Haiti.

I am able to rent the one house with no problem. Some of your post discussed farming and self sufficiency. I wanted to know if you had and any business ideas that I could look into as an ex-pat.

I am selling my home in New York and want to become homesteaded in PR to take advantage of Act 22 and 20.

Is there any internet or simple ways to make extra income? Are there any services that we (my wife and I) may want to start researching prior to our permanent move in 2 years??

I want to really just subsidize our pension with something extra. I would love if it its was environment related or holistic or even agricultural.

My computer skills are fair but I learn quickly. My wife and I are just burnt out of the NY rat race, we have no children and life is too short.

Do you see anything on the horizon that may be a wise area to look into?

Sorry for the broad question.

Steve M

Hey Mac - I just saw your post about the article on Jones Act.  I'd like to see it.

Thank you

Liz

Here's an update on the debt crisis. It seems PR may miss a bond payment, which will put it in default.

I saw in the news yesterday about the push to be able to file chapter 9 bankruptcy.  This is a really naive statement, but here goes. When the U.S. bailed out banks and car companies...why was that acceptable, but trying to work with Puerto Rico on debt restructure is not workable? I know, I haven't done any homework on this and I'm just making a very uninformed statement, but it seems that something could be done. 

Why are republicans "stalling" the bill to file chapter 9 bankruptcy?  Maybe I have to go back and look at your article again

etilley23 wrote:

I saw in the news yesterday about the push to be able to file chapter 9 bankruptcy.  This is a really naive statement, but here goes. When the U.S. bailed out banks and car companies...why was that acceptable, but trying to work with Puerto Rico on debt restructure is not workable? I know, I haven't done any homework on this and I'm just making a very uninformed statement, but it seems that something could be done. 

Why are republicans "stalling" the bill to file chapter 9 bankruptcy?  Maybe I have to go back and look at your article again

The people in the island island do not have a vote, nothing to buy. While some latin groups in the US are claiming that they are with PR and that they will pressure congress and the administration, getting people united to speak with one voice is HARD. I bet politicians are counting on that so it does not affect them.

Young politicians are usually full of fire and want to do the right thing for the people, soon they find out that if they don't play ball, they will not be able to effect any change, so like the others, they become compromised and soon it is all about staying in power and their own EGO.
Right or wrong that is my opinion.

I can not be a politician I call a spade a spade and refuse to compromise or paint over bull....

It wasn't a rhetorical question.  I mean, why?  What is the difference? I guess, maybe you are answering the question, passing the legislation has nothing to do with caring and finding a solution, but egos of politicians.  That is your answer?

What will happen if they do go into default?  Will the creditors take our coconuts? Businesses will stop operating?  Remember a few years ago when they had the government shut down because they couldn't pass a budget? This seems similar.  It is a huge buildup and then nothing will really happen.

So, I've been here almost 2 months.  I really like the slowness of things, but I don't think that works for people who "want to get stuff done" and go go go! On the mainland, I hated the go go go!  Getting too old for it! The statement in the article about missing the bank wire is kind of funny to me because transferring accounts, changing banks, etc., really took time for me when I got here.  I didn't have a ton of money, so I couldn't just put money in the bank.  I just had to "let it go".  I had to pay things with moneygram, etc.  Kind of crazy and island style to me   It all worked out, but it took time.  I had to accept when people would tell me things like, oh, that will take 5 days, etc.

Bottom-line about bankruptcy is what will happen if they are not allowed to file for bankruptcy? Chapter 9 is debt restructure, not even walking away, but just giving them time to find a "repayment plan." So, why not? I mean, really?  Why is this difficult to pass?  That's where I feel naive.  I just can't see why that would even be an issue.  If PR didn't want to pay anything, that would be different.

No Facts just my opinion.

In my opinion it is about lobbyist, they want PR to pay in full and on time and that is fine but PR is overburden and unable to pay, so mostly wall street is pushing for no bankruptcy.

Same with the other issues about transporting goods, etc. They are milking the cow and they like their milk. The politicians like the Who@@s they are like the perks they get from the Lobbyist and the money raised, like paying for sex, the people get Sc@@@d and the pimp gets the money. -- my opinion, I told you I was not politician quality.

Maybe NomadLawyer can amplify on this, but it is my understanding that the PR constitution states that the obligations of PR debt are to be payed before the people of PR. So constitutionally PR is obligated to shutdown, Stop paying police, close ALL schools, etc, to raise the money to pay its Debt. The Debt is more important than the people based on that.

If PR and all their businesses private and public can declare bankruptcy, then the shareholders are forced to negotiate, also some of those shareholders will be given priority over other shareholders depending on the type of share they have. It will be either a negotiation or a judge mandating the way the debt will be payed. Which means that the shareholders lose their current advantage.

I am not sure what the implications are if we decide to change the constitution, or if we tell them to just go take a flying ...., but it would not be pretty for the future when PR needs to borrow money, even a little.

I am not an expert, but not even the US has a balanced budget. If PR is forced into that, there will be a lot of pain mostly on the poor and elderly in my opinion. But PR will not stick to it for very long since it is political suicide. Whoever sets that budget will not be reelected and the party they belong to will be very unpopular for a long time.

People do not like the medicine, but they expect thing to be fixed at any cost as long as they are not adversly affected.
Just my opinion.

I totally agree with you Rey.  The poor and elderly in PR will suffer, but others won't.  The lobbyists and politicians will not.  That is for sure.  Well, August 1 is 12 (13???) days away.  We'll see what happens!

Another update: PR owes $5.4 Billion in payments over the next year!

NomadLawyer wrote:

Another update: PR owes $5.4 Billion in payments over the next year!

The many fine retiree residents willing and able to put up with water, power and infrastructure interruptions will do so.  I applaud them for their adaptability.  I really do. Some are "economic refugees" and know a lower cost of living on the island may involve less than reliable services and a bit of sacrifice to live in "paradise." But, let problems adversely affect tourism (and I'm thinking Condado hotels and the huge golf resorts) and the decline accelerates.  Tourism brings in a lot of money and hotel and resort guests expect uninterrupted utilities and a reasonably functioning infrastructure.  Or, should I say, I do and I certainly think for $200 to $500 a night others will too.

SawMan,
There was an article in the local newspaper today. Some of the hotels are having to turn away customers because of the water shortage. Some have invested in cisternas (water tanks) but they are not enough for the demands. The water company have water trucks but they still can't get enough water. Sadly this will affect the tourism which the island really on.

adlin20 wrote:

SawMan,
There was an article in the local newspaper today. Some of the hotels are having to turn away customers because of the water shortage. Some have invested in cisternas (water tanks) but they are not enough for the demands. The water company have water trucks but they still can't get enough water. Sadly this will affect the tourism which the island really on.

Wow.  Hopefully rain comes soon!  Here in Texas (as you know) we pulled out of a seven-year "drought" in a matter of weeks and now have flooded lakes and low lying areas. Nonetheless, water service was never interrupted and the drought restrictions were sensible - stop watering lawns so frequently.  Contrast this with California where just entering their third or fourth year of a drought, drastic actions are not going to be sufficient to keep water available for "essential" household use.

Well, "in light of the financial problems there at this time", we just lost a tourist, potential ex-pat, scheduled to stay in our house the entire month of May 2016. They will now be looking in St. Croix.

melendezki wrote:

Well, "in light of the financial problems there at this time", we just lost a tourist, potential ex-pat, scheduled to stay in our house the entire month of May 2016. They will now be looking in St. Croix.

Why he canceled?

I just spoke with someone who left St Croix after 20 years because of the unemployment and other related problems. I guess it all depends on the press and who reacts to it. I will keep you posted in regards to my airbnb site.

It's all good.  They're 4000 miles away from the island and only listening to the latest news. I heard St. Croix is terrible compared to PR anyway.

We've been to St. Croix a couple of times over the past year.  The last visit we took a tour of the island with a local driver and he said that the closing of the Hovensa refinery has hit the island quite hard.

Raising taxes on the island is not a good idea for the locals. It would assist the government with its problems of revenue for a while. It will also run more people away. Raising taxes usually is beneficial by levying on people with disposal income or when spread across a broad base.

The Federal government has not declared bankruptcy, YET. I do not think any state has declared bankruptcy. Detroit, Orange county, CA and a few others have.

Puerto Rico on this issue should not have the power to file. if local people choose independence, they can do whatever they wish to solve the debt crisis.

The mainland urban areas and PR urban areas have lost touch with their surroundings. By adopting, and integrating low value commercial brands from the US into their lifestyle, it has caused the dependence of needing more consumption with less substance and value.

John Oliver's show has a great segment on the 40% of food produce in American which is waisted.  Local farmers is the only realistic choice, There is an ocean with fish surrounding the island. There is an abundance of sunshine for solar power. Using some of these in conjunction with a minimal use of typical urban life, would reduce some of the need to require more money of sustain a family. 

I will never buy a new vehicle. I would buy a used, reliable and fully functional vehicle. It makes no since to loose 20% of the value once you drive off the car lot. Creating a money bill eating way at your paycheck. Autoworkers and car dealers, might not like this thinking, but if those business contract and downsize, they will find something else to sale and build eventually.

PR is not the only group caught up in the so called Free market/rate race/over taxed/politically unaccountable system.

Don't ask for help from the USA congress or Obama, Don't act like the dysfunctional US congress.
If the Puerto Rico people do nothing else revoke the pensions, immediately remove from office and band them for life, investigate the fiances and expel all elected and appoint officials who cause the $72 Billion in debt.

You have your own pseudo country, "ACT LIKE IT"

vagantem wrote:

There is an abundance of sunshine for solar power.

I agree with some of your thoughts and ideas, some I don't .  Forget solar.  The current state of technology does not make it close to economically feasible.  Think:  $100 to produce $1 of electricity.  It exists now where it does solely due to massive government subsidies.  Nor is it long-lasting.  Solar panels have maybe a 15 year life.  So, it's not the"build it and never worry about it again" solution some people think. Also, although sunshine is good, heat is bad as it lowers even further the efficiency of the solar panels.  Solar panels make more sense in cold climates, not hot.  Besides, the government and utility have no money to spend on such an expensive capital intensive project.  Natural gas and oil are way too cheap!

vagantem wrote:

Raising taxes on the island is not a good idea for the locals. It would assist the government with its problems of revenue for a while. It will also run more people away. Raising taxes usually is beneficial by levying on people with disposal income or when spread across a broad base.

The Federal government has not declared bankruptcy, YET. I do not think any state has declared bankruptcy. Detroit, Orange county, CA and a few others have.

Puerto Rico on this issue should not have the power to file. if local people choose independence, they can do whatever they wish to solve the debt crisis.

The mainland urban areas and PR urban areas have lost touch with their surroundings. By adopting, and integrating low value commercial brands from the US into their lifestyle, it has caused the dependence of needing more consumption with less substance and value.

John Oliver's show has a great segment on the 40% of food produce in American which is waisted.  Local farmers is the only realistic choice, There is an ocean with fish surrounding the island. There is an abundance of sunshine for solar power. Using some of these in conjunction with a minimal use of typical urban life, would reduce some of the need to require more money of sustain a family. 

I will never buy a new vehicle. I would buy a used, reliable and fully functional vehicle. It makes no since to loose 20% of the value once you drive off the car lot. Creating a money bill eating way at your paycheck. Autoworkers and car dealers, might not like this thinking, but if those business contract and downsize, they will find something else to sale and build eventually.

PR is not the only group caught up in the so called Free market/rate race/over taxed/politically unaccountable system.

Don't ask for help from the USA congress or Obama, Don't act like the dysfunctional US congress.
If the Puerto Rico people do nothing else revoke the pensions, immediately remove from office and band them for life, investigate the fiances and expel all elected and appoint officials who cause the $72 Billion in debt.

You have your own pseudo country, "ACT LIKE IT"

I agree more people should be self sufficient and some are. We should do more, I agree. But that does not do anything for the 73 Billion that has to be paid due to over 15 years of borrowing.

We have changed as a people, we have gotten used to a culture and economy based on consumption this behavior was imported from the states. Today we buy chicken tenders and pay 10 times more than raising a chicken, and making our own chicken tenders and a whole lot more.

You will likely disagree, but rubbing shoulders with the Americans which have more resources have made us change and we also are acting the same but without the resources and being dependent to the US merchant Marine for 80 percent of what is consumed in the island, Items we get at exorbitant prices.

The cheaper I live is good for me, but...... it still does not get 73 Billion dollars payed. Bankruptcy could even out the playing field and allows for fair negotiation. Right now the bond market has the Island by the Gonads and will continue to pressure unless the courts get involved.

Fund managers knew that buying those bonds was risky, that is why they demanded high returns. When someone takes a risk and things don't go well they get a lump. That is fair also. They also not just Puerto Ricans have to live with the results of their actions.

The bottom line: It is either bankruptcy or default, default will get them less money and will be tied in courts for many years.

The last time Puerto Rico tried to get independence was in the 1800, the US government bombed the town and killed a lot of people. if you do not believe me look it up.

Even if the People were to vote for independence, I find it hard to believe that the US will let it become independent. Look who is making a fuss that PR should be independent: Russia and Cuba.

While PR has to raise taxes, then collect them which it has not been doing very well, all the money will simply go to interest. We are dealing with legal LOAN SHARKS.

Bankruptcy court will allow the steam to escape, if you squeeze the people too hard they will revel and there will be riots and maybe worse.

Like I said, you don't have to agree.
It looks to me like you need study the history of PR and see the control that the US has on the island. PR was colonized twice, Once by the Spaniards and then by the US. Neither one was invited, we are a treasure of war!!!!!!!

We have little say in our destiny, agree or disagree, your choice.

The heat from solar panels is best used for heating water, which is a further saving to increase the rate of return. I agree many small scale uses of solar systems, for a convention home, do not realistically permit "build it and forget it". It is best used to augmenting and lower consumption of other power sources.

it is practical on a large scales, as the Airport on St. Thomas, LED street lights power by small panel/battery, there are also system designed in the shape of sunflower trees and large bushes. The money saved can be diverted to subsidizing more reinvestment.  Germany has a similar model.

The process is to phase in solar power and not consider it as swamping a cellphone when a contract is up.

Natural gas is an improvement over coal. When considering the total industry and volume of consumption. it has some of the same harmful effects on subsurface soil as mining for other resources.

The total cost of mining, distributing, buying, environmental regulation, pollution and health care cost living near power plants and run off coal, natural gas is significantly more than solar power. Most people only compare cost effectiveness of the production to consumer.

Granted even if solar power was implemented to reduce prices to the consumer and help government budgets, politicians and the other crooks would just misuse and/or steal that money too.

Solar power is increasing in the island, specially with the higher cost of electricity. Private citizens, municipalities and other industries in the island had gone that route. But even thou it helps the ones that can afford to install the system (it cost approximate $10K to have it installed) or rent it and get into a 25yrs contract, still hurts the electric company since costumers leaves, demand decrease, revenue decreases.

At the present time, because of the overuse, waste and bad administrations, the government cannot afford to modernize their electric plants to a more efficient fuel (natural gas). There is not an easy solution to this crisis, some of the decisions that will need to be made will adversely affect a political careers, and we know politicians are not known for self sacrifices.

Granted, I haven't been to every country on the planet, but in all the countries I have visited or am familiar with, I have yet to learn of one that didn't have a consumerist culture. My point is I do not think this is a uniquely American condition. It results from human nature.

I say American, being one of the worst examples of conspicuous consumption. This refers to the trend of telemarketers calling repeatedly to sale something in violation of do not call lists, companies colluding to limited consumers options of products and services, price fixing to form virtual monopolies and misleading labelling or omitting information on products.

This social engineering of consumers on one end while stalling job creation, downsizing middle class positions and restricting competition from small business is a significant problem. 

Any utilities which are necessities should be government own or highly regulated. There should be a fixed profit rate of 15% to 25% maximum. The rest should go towards public infrastructure or education.

Any system or concepts governance is only as useful as the honesty or integrity of the people involved.

vagantem wrote:

Any utilities which are necessities should be government own or highly regulated. There should be a fixed profit rate of 15% to 25% maximum. The rest should go towards public infrastructure or education.

Any system or concepts governance is only as useful as the honesty or integrity of the people involved.

These views range from to ironic to humorous to silly when posted on the thread "Puerto Rico's Sovereign Debt Crisis."  We know how well and efficient governments run things. (This last sentence would be sarcasm).

ReyP. I am the type who does not consider agreeing or disagree to always be vital. Having a discussion and exchanging information and ideas, which may enlighten either or both parties holds the most relevance with me.

Only the loan sharks would take a hight risk bond, the other side of this is, why take money you can not repay. It more bad economics and reflects the same practices of those citizens who are conspicuous consumers. Many places in the USA are singing the same tune, when you ask their legislature to pass a balance budget constitutional amendment in exchange for concessions or bankruptcy relief, they walk away from the table.

Yes, the good old boys did stifle and has continued to manipulate the PR independence movement. Being bombed is less likely to occur when an independent vote is center stage in the world news. There is more to worry about from covert ops and blackmail than bombing.

Defaulting on some scale is going to occur, pretty much etched in stone. Congress and their lobbyists masters, wants the PR to be in this dilemma. Not with a huge debt, but in a crisis to have control over the island by proxy or by persuasion. It make little sense to ask the drug dealer(Uncle Sam), who is using their drugs(bad economics), to assist with an intervention and recovery.

Adopting the current American economic habits is a disaster for just about every country. American use to value quality of work and a Protestant work ethic. Those views are in a minority now. Economic slavery is the fad of this century, it is more polite than plantations, reservations and indentured servants.

You do have a choice. This may sound like a far fetch stretch. There is precedents to fight for your choice to exert more self governance. Lets take total independence off the discussion table for now.

The federal government says recreational cannibals and profit from cannibals is against federal law. Three states and Flandreau Santee Sioux Tribe says we make it legal. Feds did not shut down those 4 groups. Those state are racking up revenue from legal pot. "I don't advocate its use."

Native American sued the Federal government for misuse of royalties from their lands over decades. They won and settled out of court on a few Billion to move on and benefit those living today. Still waiting to see when the check will be cut on that one.

The Marshal Islands 1979 chose its independence, but maintain a treaty with the USA. Guam has debated to stay or leave with US commonwealth for years. Independence for PR is a real reality. Puerto Rico is really the best candidate from any territory or native American reservation to potentially be self-sustaining, minus the $73B issue on the table.

Start seizing drug money, complete the judicial process and pay the debt down. I know it is only pennies on the dollar.

It takes hundreds of small courageous initiates to fix a huge problem.

Sawman, I see the crisis as poor management and not prioritizing necessitates for benefiting citizens. Those are the decisions on which the crisis was created. Without correcting that premise, wiping away $73B today, doesn't reduce or prevent another $73B debt ten years from now.

A few states have regulations which fixed the consumer rates of utilities. Cities and counties have acquired power lines and charge for supplying power. States, cities, large university all have constructed and own power plants, water companies, etc., obviously very very few are solar powered.  I am convey the concept, not suggesting an exact duplicate of implementation.

I acknowledge innovative thinking seems humours, until people build it and then call it a paradigm shift.

vagantem wrote:

ReyP. I am the type who does not consider agreeing or disagree to always be vital. Having a discussion and exchanging information and ideas, which may enlighten either or both parties holds the most relevance with me.

Only the loan sharks would take a hight risk bond, the other side of this is, why take money you can not repay. It more bad economics and reflects the same practices of those citizens who are conspicuous consumers. Many places in the USA are singing the same tune, when you ask their legislature to pass a balance budget constitutional amendment in exchange for concessions or bankruptcy relief, they walk away from the table.

Yes, the good old boys did stifle and has continued to manipulate the PR independence movement. Being bombed is less likely to occur when an independent vote is center stage in the world news. There is more to worry about from covert ops and blackmail than bombing.

Defaulting on some scale is going to occur, pretty much etched in stone. Congress and their lobbyists masters, wants the PR to be in this dilemma. Not with a huge debt, but in a crisis to have control over the island by proxy or by persuasion. It make little sense to ask the drug dealer(Uncle Sam), who is using their drugs(bad economics), to assist with an intervention and recovery.

Adopting the current American economic habits is a disaster for just about every country. American use to value quality of work and a Protestant work ethic. Those views are in a minority now. Economic slavery is the fad of this century, it is more polite than plantations, reservations and indentured servants.

You do have a choice. This may sound like a far fetch stretch. There is precedents to fight for your choice to exert more self governance. Lets take total independence off the discussion table for now.

The federal government says recreational cannibals and profit from cannibals is against federal law. Three states and Flandreau Santee Sioux Tribe says we make it legal. Feds did not shut down those 4 groups. Those state are racking up revenue from legal pot. "I don't advocate its use."

Native American sued the Federal government for misuse of royalties from their lands over decades. They won and settled out of court on a few Billion to move on and benefit those living today. Still waiting to see when the check will be cut on that one.

The Marshal Islands 1979 chose its independence, but maintain a treaty with the USA. Guam has debated to stay or leave with US commonwealth for years. Independence for PR is a real reality. Puerto Rico is really the best candidate from any territory or native American reservation to potentially be self-sustaining, minus the $73B issue on the table.

Start seizing drug money, complete the judicial process and pay the debt down. I know it is only pennies on the dollar.

It takes hundreds of small courageous initiates to fix a huge problem.

Wow, you do have some off the top ideas. I do not believe I will take the time to answer but 1 single point.

It was not the people that decided to borrow the money, it was the politicians. People here tend to just want to live their life and take care of their families, they do not always know what the politicians are doing, and sometimes they do not understand it or the implications. Is it their own fault that they did not pay attention????? Yes. But setting blame at this stage of the game is not worth it, not unless you can prove that the money went into their pocket and that is hard to do.

Now is the time to find ways to negotiate the loans and we can only do that with default or bankruptcy.

Using drug money to pay the debt? - Wow.

If you read the news, PR had never say we want the debt "wipe" out. The point is getting a more level plan so they/we can negotiate better/realistic terms to repay. That's what's been ask all along, same as our government did for private entities and other cities. 

I agree with Rey, if you ask the common puertorican, they are not involve in what the politics are doing in a day to day bases. Is this correct...NO, but even in the states most people do not follow politicians on a day to day bases. Most people in the island are more concern about their family and what they need to do to bring food to their table. That's why politicians get away with it....

If you really want to understand how the island is were it is, come down, live in the island, talk to the people that live there. It is very easy to read the news and make an interpretation based on what the news want you to know, it is a different story when you talk to the people and experience the issues first hand.

And one more point....most Puertoricans do not want to separate from the US, they want equal rights. Why you think we move to the mainland? Do you know that in PR we cannot vote for the president but in the states we can. Do you know that we pay the same SSN taxes but if we retire in PR you are only entitle to about 60% of your retirement? But if I retire in the mainland I get 100%. Do you know why the US candidates campaign in PR? Over 50% of the driving votes in the eastern states are driven by the Latin vote, the majority of the  Spanish that can legally vote  in the mainland and the sons, daughters, brothers, sisters, grandparents of those puertoricans that still live in the island....and believe me we are PROUD to be puertoricans even when we live in the mainland

The insight is appreciated and welcomed. I did visit the island recently and toured a couple cities. I was fortunate to have some hour long conversations with different people, regarding everything mention in this thread. These were intelligent and informed Puerto Ricans. I talked with Puerto Ricans, Dominicans, Haitians and gringos. Families are truly focused on living and working, just as you mentioned. Mostly, if i was not spending money, people didn't want to be preoccupied with me being an outsider. I did make a few friends somehow.

I was expecting party central everyday where i stayed, it was not the case. Overall I was impressed with everything except the prices in gringoland and so many toll roads near the capitol region, however, those are necessities of the economy. Precio muy alto.

The idea of drug money, which is a small amount compared to the total $73B. On the mainland, law enforcement keeps seized money and assets, until the final disposition of the trial and appeals. Mostly it goes into a special account of that city strictly for drug enforcement. So it is not a crazy idea, especially when you can auction off the assets. It is a limited and unreliable revenue source. It takes modifying the law to be worth the effort.

I suggest the wipe away scenario to inquire what would be different in the operation and drafting of future budgets for the island. Giving this was the same question put to some legislators on the mainland. There debt is larger than the PR's. They walked away from the table and only consider cutting their raises as a last resort, that was pathetic leadership on their part, term limits should have been in the US Constitution. They are experiencing the exact same debt scenario for similar reasons. Those states can file bankruptcy or default, but have not, because for the next 10 to 20 years their credit rating would be only worth laughing at and it would make future financing quite fleeting. 

Respectfully, bankruptcy or defaulting without total changing the business model is a band aid. It is not about blame and shame. No bank moving forward will fund any new projects until they know the new operation model will avoid a default again. Argentina, Greece and soon other EU counties are examples.

My question today is, if the debt payments is removed out of the PR budget, is the budget balance with revenues and expenses?

I could careless if the banks and investors get their money back. It is a legal mafia, buying politicians in every country like penny candy.

Yes, I was aware of the second class status the US government has maintained for the PR island, just as other territories and native Americans are subjected.

Just to clarify, under the US Bankruptcy Code, States cannot file for bankruptcy. Municipalities can file for bankruptcy (Chapter 9) with the permission of their State (a la Michigan granting permission to Detroit to file). This includes counties, certain authorities and other quasi-governmental entities.

States themselves cannot file for bankruptcy because the States are sovereign while municipalities are not. E.g. Greece, the US Federal Government, Ireland, etc. So even if the Bankruptcy Code is amended to help PR, which I think will probably happen sooner or later, it will only allow for PR municipalities to file (which I believe will include the AEE). This will certainly be a step in the right direction. It's interesting that so many on this site, regardless of their differing political persuasions, agree that the fundamentals must change or bankruptcy will only serve as temporary relief.

I believe that what is happening to PR will happen to the US. I believe that the high debt levels the US federal government carries now is a major reason for the economic stagnation that we are experiencing. I believe the staggering debt levels in most of the EU are also the reason that the EU economy hasn't grown at all for years now. Math is a heartless bastard.