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The Growing Puerto Rico Disaster

2017 October 11
by Ian Welsh

The number of people without power on the Island is increasing, not decreasing, up 6% from yesterday, to 90%. A third of the island doesn’t have running water. Half the people don’t have cell phone coverage.

Aid has been slow and largely ineffective. There is reason to be worried about disease outbreaks, and medical care is severely handicapped.

Meanwhile, Puerto Rico has a massive debt overhang, and is crippled by it.Trump has suggested a 4.9 billion dollar bridging loan to help them over. The people who actually hold Puerto Rico’s debts, of course, have not been forgiving. They weren’t forgiving to Argentina, or to the Congo, and they aren’t going to be forgiving to Puerto Rico.


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The disaster relief has been bungled. It shouldn’t primarily be a matter of money in any case; the island should be flooded by work crews from all over the US with the materials they need to do the repairs, and the necessary heavy equipment to clear blockages, while large airlift is used to get to areas that are more remote.

This is a logistical exercise, the US has the capacity, and the US has chosen not to use the capacity. It is that simple.

As for the debt, most of it should simply be forgiven. The US government has the ability to do that.

We have a weird idea that debt is sacrosanct in our society, an idea which is totally out of whack with what makes good societies or good economies.

Good economies are based on easy debt forgiveness. People who lend money have a responsibility to not over-lend, and if they do, they deserve to lose their money. If you lend money to deadbeat Uncle Bob, you don’t expect to get it back. If you lend money to someone already in hock to three other loan sharks, well, you’re probably not getting that money back.

Excessive debt cripples people and economies, making them unproductive. Easy bankruptcy removes the debt so they can move on, and it also removes lending ability from people who have proven they have bad judgment about to whom they should lend.

Easy bankruptcy doesn’t mean “keep everything,” but it does mean keep everything necessary for economic and personal viability. In personal terms, tools a primary residence, a car, and so on. In government terms, all the lands, buildings, equipment, and so on required for the government to do its job.

Puerto Rico is an economic cripple. It doesn’t have the resources to fix itself, DC refuses to send sufficient help, and more debt isn’t going to fix its problems–any more than more debt has helped Greece.

Pathetic.


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25 Responses
  1. SnarkyShark permalink
    October 11, 2017

    Welcome to the machine. This is the future.

  2. GAN permalink
    October 11, 2017

    Trump is teeing up Puerto Rico for rich corporate oligarchs to move in and buy up any prime assets and real estate for pennies on the dollar. Disaster capitalism 101

  3. Peter permalink
    October 11, 2017

    @GAN

    The Puerto Rican leadership class teed up the country for takeover long before Trump became CiC. What may be for sale there now is stripped wreckage that will require huge investments to be useful.

    If this corrupt and incompetent leadership in PR remains running things this bailout will just be the first in a continual series of black holes to try to be filled by the mainland.

  4. V. Arnold permalink
    October 12, 2017

    We have a weird idea that debt is sacrosanct in our society… Ian

    But, but, our whole society and economy is debt based; debt is good.
    U.S. capitalism is despotic.
    Starting with Katrina and contiuing to this day; natural disasters will be given lip service and little else; they’re just too damned expensive to deal with properly.
    Puerto Ricans are not white people and will be accorded thusly…

  5. cripes permalink
    October 12, 2017

    The disasters pile up so fast, I have to wonder of there is some consciousness directing all this destruction.

  6. Jeff Wegerson permalink
    October 12, 2017

    If they are not getting the attention they want from the armed forces logistical capabilities then perhaps too much off the grid self government via threatened independence aid from black market Albanian arms shipments can attract it.

  7. V. Arnold permalink
    October 12, 2017

    cripes
    October 12, 2017

    You mean like the sentient planet Gaia?

  8. EverythingsJake permalink
    October 12, 2017

    What are a few hundred thousand brown poor people against the cock of a Jamie Dimon, Sandy Blankfein or Robert Rubin. Just a way for the Clinton Foundation to make money supplying rotten toxic houses. Until something like a guillotine sings again, there will be so many more to fuck or fuck over, an endless supply. Probably unusually bleak tonight, humanity may deserve its extinction kind of thing. So much potential, so much greed.

  9. October 12, 2017

    I wrote on Katrina – real time. People still don’t understand it.

    (I suppose I should say that there is more of the the novel
    https://symbalitics.blogspot.com/2017/10/red-zone-1.html
    https://symbalitics.blogspot.com/2017/10/red-zone-ii.html
    https://symbalitics.blogspot.com/2017/10/red-zone-iii.html
    )

  10. October 12, 2017

    Perhaps not sentient but a far greater organism none-the-less, shrugging off an infestation of fleas.

    The most efficient way to remove ticks is smother them in petroleum jelly.

  11. Sid Finster permalink
    October 12, 2017

    Axtually, compared with most countries, the US has rather lenient bankruptcy laws. After all, many of the people who founded the US were on the run from their creditors. This is the reason why, among US states, bankruptcy exemptions in Florida and Texas are so open.

    Outside the legal context, bankruptcy in many countries (Germany comes very much to mind) is seen as a moral failing. You did not pay your debts, so you are a bad person.

    Even if the law allows you an out, you can never be trusted with a position of responsibility again.

    This even applies to high-level employees of bankrupt enterprises. It’s a major black mark on an employee’s record. And “trading while bankrupt” is a criminal offense.

  12. October 12, 2017

    Have people noted the latest headlines? (WaPo): POTUS threatening to pull American federal relief personnel out of PR altogether.

    Is this for real? Can this happen? It’s garnered something like 3300 comments in under 40 minutes …

    We wrote along similar lines to Ian’s post yesterday.

  13. nihil obstet permalink
    October 12, 2017

    Debt isn’t all that sacrosanct: “National Flood Insurance Program Debt Forgiveness Act of 2017”.

    Writing/buying/collecting on insurance to protect beach resorts gets debt forgiveness. The plan is for Puerto Rico to be lent more more money for recovery.

    It’s not debt that’s sacrosanct. It’s the preservation and increase of the wealth of the wealthy, and when debt doesn’t advance the cause, debt disappears. Since most debt does advance the cause, it’s usually swathed in layers of morality.

  14. Ché Pasa permalink
    October 12, 2017

    Disaster capitalism is neoliberal economic doctrine.

    It’s always the fault of the profligate natives, don’tchaknow.

    I’m so old, I remember when Trump was going to do away with the neoliberal paradigm.

    Ha.

    Fooled ya.

  15. StewartM permalink
    October 12, 2017

    Good economies are based on easy debt forgiveness.

    If we went to a society that punished those who lent money to those who couldn’t possibly pay it back, then wouldn’t the plebes actually then need *sufficient real income* to make the economy run?

    By contrast, doesn’t a society run by finance (i.e., those who make money by selling it to those without) benefit from an economy where the plebes have to *borrow* from them the money needed to go buy a loaf of bread and a gallon of milk?

    Easy credit and real wage decline didn’t come about by accident. It was necessary to pass out the credit cards to keep consumption up in the Reagan/Thatcher economy, designed to transfer wealth from everyone to the top 1 %.

  16. Peter permalink
    October 12, 2017

    @ETJ

    I hope you don’t believe that Puerto Ricans are all poor Brown people. There are poor people and Brown people in PR but the vast majority there are White people and they enjoy the highest standard of living in all the Caribbean.

  17. Hugh permalink
    October 12, 2017

    Who owns Puerto Rico’s debt? According to this article (http://money.cnn.com/2017/09/27/investing/puerto-rico-debt-who-owns-trump/index.html), “Less than 25% [i.e. right around 25%] of Puerto Rican debt is held by hedge funds, according to estimates by Cate Long, founder of research firm Puerto Rico Clearinghouse.” Most of the rest of it? “Nearly 300 bond mutual funds own Puerto Rican debt, according to data compiled by Morningstar. Some of the biggest holders include mutual funds run by household names like OppenheimerFunds, Franklin Templeton, Goldman Sachs (GS), BlackRock (BLK) and T. Rowe Price.” There are tax advantages to owning Puerto Rican debt, no federal, state, or local taxes on it. The rates were higher because the risk was greater, but a default or hair cut goes with the territory. What I did not like in the article was that it tried to portray the idea that Puerto Rican debt was held by mom and pop investors. That seemed deliberately misleading. The firms listed above plus the hedgies are all major players and knew or should have known what they were getting into. It’s more like they didn’t care because they got their fees either way.

  18. Hugh permalink
    October 12, 2017

    dbk, Trump is not fit to be President. Every day he gives new and disturbing examples of his unfitness. He poses a clear and present danger to the country. We have had a string of bad Presidents who have done bad, even disastrous, things, but Trump is on an entirely different level. He’s like a football player boasting that not only does he have the best three-point shot in the game but he is the best football player who ever lived, even better than Babe Ruth. It makes no sense, none. Both the Democrats and the Republicans in Washington know this. They have been talking about it nonstop, off the record for months. But they are all too big of cowards to say let alone do anything about it.

  19. kj1313 permalink
    October 12, 2017

    @Hugh If I didn’t know better I would say Trump is an accelerationist. :\

  20. realitychecker permalink
    October 13, 2017

    @ kj1313

    Bingo, an accelerationist is exactly what he is.

    He is somehow managing to ‘blunder’ his way into accelerating public understanding of how dishonestly and cynically manipulative so many of our trusted institutions have become. And those institutions are all howling their agony. These are undiluted goods, IMO.

    This is a necessary part of any process that is looked to to lead the People to being angry enough to actually demand their freedom back. It may or may not work, but it was never going to look pretty.

    I am managing to enjoy the spectacle, I must admit. 🙂

  21. jackiebass permalink
    October 13, 2017

    Debt is the weapon used by neoliberals to steal the assets of a country. It has been used for decades. Get the country so in debt that they can’t repay. As a condition of relief oppressive mandates, privatization, are imposed on them. With republicans and Wall Street democrats , this is how they govern. They only care about the 1%. What is happening in the US is shameful but not surprising considering who runs the show. Elections have consequences and people will suffer for their uninformed voting.

  22. gnokgnoh permalink
    October 13, 2017

    @realitychecker
    So, he is separate and apart from our institutions? You make him sound like a deus ex machina. He is not, and people are suffering. The downward spiral will be extremely painful, and the poor and disposed will get it first and worst. I’m not sure the spectacle deserves a smiley face.

  23. realitychecker permalink
    October 13, 2017

    @gnokgnoh

    I would urge you to work to escape the personality game, and think outside your accustomed box(es).

    It does not mater whether you like Trump or not, or whether he is an asshole or not.

    You must awaken to the FACT that we have become a tremendously dysfunctional society, awash in endless lies and deceit from those we should be able to trust.

    The People must wake up to the fact that they have no friends in government, or in any corporate assets like the media, and no high moral arbiters among the Establishment actors.

    Trump is bringing that awareness closer to fruition, I doubt he means to. But we need him to, or we are truly lost. Because we have already proven that we lack the spine or the awareness to address these problems honestly for ourselves.

  24. cripes permalink
    October 13, 2017

    ” Peter permalink
    October 12, 2017

    @ETJ

    I hope you don’t believe that Puerto Ricans are all poor Brown people. There are poor people and Brown people in PR but the vast majority there are White people and they enjoy the highest standard of living in all the Caribbean”
    ——-
    More to the point, Puerto Rico enjoys by far the lowest standard of living in the United States, to which they belong.

  25. October 16, 2017

    Dept is the imbalance between two chemical environments that forces fluid through a membrane. Osmosis. Debt causes money to move, like all generating fluids. Debt is motive. Without it we have homeostasis, which is non movement; which is death, when you think about it.

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