The Takeover of Puerto Rico

[Judi Lynn]

June 22, 2016
The Takeover of Puerto Rico

by José L. Flores

The Island of Puerto Rico is currently in the midst of an economic crisis. It has been reported that Puerto Rico’s government owes over 70 billion dollars in debt, mostly to investors holding state issued bonds, living in the continental United States. Unable to repay such a huge sum of debt Puerto Rico has appealed to the U.S. Supreme Court attempting to restructure its financial obligations. This appeal was quickly denied, thereby provoking the U.S. Congress to step in and attempt to resolve this dilemma.

It was the House Natural Resources Committee, which passed a bipartisan bill resulting in a complete takeover of Puerto Rico’s economy. The bill calls for an oversight-committee of seven people to manage the entire financial economy of the island. Only one of the seven is required to be a resident of Puerto Rico. Four of the remaining six will be chosen directly by the Republican congress. The other three can be selected by President Obama; however, his choice will be from a list provided by the House Republicans. Aside from this economic-junta, further austerity measures are required in the proposal. Undoubtingly, austerity in the face of the current Puerto Rican depression will further disparage the working class and poor of the island.

A possible and reasonable response to this news could be; what is the current territorial/state status of Puerto Rico? The United States often refer to the island as a “commonwealth.” Which brings up another interesting question; what does it mean to be a commonwealth? This legal term derives from English common-law, referring to an independent state, which maintains its sovereignty within an association of similar sovereign states. This definition certainly does not apply to Puerto Rico. Seven people making decision for 3.5 million is appalling. The fact that they are unelected and mostly appointed by a foreign body is infuriating. Certainly, this situation does not constitute a free and equal state in a community of free and equal states. This situation constitutes imperialism, which makes Puerto Rico a formal colony in a frightful empire. With that said, perhaps the relationship between the U.S. and Puerto Rico should be reconsidered prior to settling the debt issue.

In the late 19th century a war was concocted by the murderers in the U.S. War Department, in order to conquer the remaining Spanish Colonies in America and Asia. Immediately following the Spanish American War Puerto Rico found itself under direct U.S. Military rule. At the turn of last century is was the Foraker Act, passed by the U.S. Congress, which ended the military rule. The Foraker Act allowed for the U.S. President to appoint a governor for the Island and appoint an eleven-member executive council, in congruence with Congress. Only five of these members were required to be of Puerto Rican heritage. Sound familiar? However, there are some noticeable differences with the Foraker Act. First the Foraker Act allowed for more Puerto Rican representation. The second difference, in the 19th century United States citizens didn’t shy away from the term imperialism and very often embraced the term. It was the polemics of Mark Twain that begun to change the idiom and vernacular, with respect to opinions on imperialism in the United States. Today the term imperialism is thankfully a bad word, but in Puerto Rico it has led to the disingenuous euphemism “commonwealth.”

More:
http://www.counterpunch.org/2016/06/22/the-takeover-of-puerto-rico/

Good Reads:
http://www.democraticunderground.com/1016161556

[MADem]

1. Puerto Rico is in a horrible position. However, the thesis that they "have" to accept this help is

false. They can refuse it with disastrous consequence.

I have to wonder how the next statehood vote will go...? I would not be surprised if t his mess is the tipping point, and we may have to re-design the flag. Particularly with Cuban rapprochement--because Cuba will do what PR can do for a third of the price, faster, and closer. And that is a huge fear in PR. Already, the Cuban expat community in PR is making plans. I wonder how long the Bacardis will stay?

Up to this point, there has been a little dance going on, and there are probably as many people who like the idea of statehood as there are those who fear they will lose their no-work government job if statehood comes. It's a very bizarre tension. It's not made any easier by the absolutely in-your-face graft and corruption that occurs on a daily basis there. The cops? Corrupt. Blatantly, bribably, corrupt. The government? Corrupt. To the point of utter absurdity. Crime? Out of hand. If you have an appointment at the dentist, or are having a small surgery, you have to BYOP--bring your own painkillers--why? Because armed gangs used to bust into doctors/dentists offices and rob them for the drugs. So now you get a prescription, you fill it yourself, and you bring the drugs to the doctor for his use during the procedure.

The departures from the island continue at a stupendous pace. And, it should be salient to note, Puerto Ricans are not emigrating, they are American citizens, with American passports. They are just moving elsewhere in America (where they can register to vote, and vote in elections). Many have moved to Orlando and other parts of Florida, up-ending the Cuban dominance of the Hispanic population there, and some were murdered in the Pulse nightclub.

I have relations there, and there are parts of the island that are like a ghost town. You can't eat that "solidarity" shit and most of the young people would rather live on the mainland. They see it as more exciting in terms of lifestyle and the opportunity to interact with peers of diverse origins, never mind the economic opportunity aspect. Years ago, Florida and Arizona used to be regarded as "God's waiting room" with huge elderly populations, and now both those states are experiencing an economic resurgence and a vibrancy in terms of younger people moving to those states to find opportunity. PR for a while is turning into a place where older people, who have left the island in search of opportunity and excitement, return in their dotage with a government check to see them through from month to month. Of course, if the economy keeps getting crappier, that might not be an economical situation for these pensioners.

PR is suffering. They need a FIX. There are no easy answers at this point in time.

https://www.washingtonpost.com/posteverything/wp/2016/05/10/puerto-rico-and-the-us-taxpayer-dont-pay-now-or-pay-later/

Fix Puerto Rico’s debt now, or taxpayers will bail Puerto Rico out later
Will we really let our fellow Americans live in a failed state?


By Jared Bernstein May 10
Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of the new book 'The Reconnection Agenda: Reuniting Growth and Prosperity.'

...Bottom line, I don’t think it’s a stretch to recognize that purchasing Puerto Rican debt was a risky move. Although defaults are rare in the muni market — only 0.14 percent of munis default within 10 years — the Puerto Rican economy cannot generate anything like the growth needed to service its debt. Creditors’ bets went bad, and the senseless quirk in the law that has no Chapter 9 mechanism for the commonwealth is the only reason we’re even arguing about them.

Why is a bailout the only alternative? Because I don’t think the nation will let fellow Americans suffer the consequences of living in a failed state as the human costs become increasingly severe. Yes, we are in a moment of considerable political upheaval, but this conclusion is bipartisan: The Obama administration strongly supports the restructuring bill, and Ryan has been doing his best to advance the legislation. Even Donald Trump recognizes the insolvency.

With the muni market at least so far brushing off the Puerto Rican default, and the broader economic costs of muddling through not obvious to most of us on the mainland, the crisis could easily drag on. That’s not a problem for many in the investor class. Remember, hedge funds invested in defaulted Argentinian debt fought 15 years before achieving a payout greater than 10 times their investment.

But it’s a huge problem for our fellow citizens in Puerto Rico, and it’s soon going to be a big problem for taxpayers. That last part can easily be avoided if Congress gets its act together.