Pension Crisis

It's Not Hedge Funds That Caused Puerto Rico to Fail to Manage Its Debts

Those who call for aid shouldn't ignore where the territory's money actually went.

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Puerto Rico
Credit: James Willamor / photo on flickr

Nowhere in John Oliver's recent 20-minute segment on Puerto Rico's massive $70 billion debt (it officially defaulted on its payments yesterday) does he mention public employee pensions and benefits and the role they've played in the island territory's financial crisis.

He talks about the various business tax incentives that helped create the situation, and there's actually a lot to learn from his segment, so we shouldn't dismiss it entirely. But like a lot of political activism over municipal debt crises, Oliver zeroes on only certain components and downplays or outright ignores others in order to create a class of villains and victims that doesn't completely reflect reality. In this case, he sets his sights on the whipping boys who run hedge funds who want to make sure Puerto Rico prioritizes paying their municipal bond debts. The victims are the people of Puerto Rico who are seeing all their government services reduced (and taxes increased) as a result of the island struggling to scrounge up money to pay its bills.

What is misleading in Oliver's story is the assumption that what Puerto Rico's government had been spending its money wisely and appropriately for the benefit of the populace it serves prior to this crisis. And when you look deeper, what you see is very similar to what we see in ailing municipalities in the United States: Puerto Rico has been throwing its money at its employees now and not adequately preparing for what would come down the line. In fact, not only does Oliver not engage in this issue at all, he ends a quote by former reformist Gov. Luis Fortuño by accusing him of being part of the problem (while presenting no facts), though Fortuño fought hard to salvage Puerto Rico's financial situation. For a better perspective, watch Fortuño speaking at Reason Weekend back in 2012 here.

Reuters thoroughly researched the state of Puerto Rico's employee pensions and found them disastrous, in even worse shape than those in high-debt states like Illinois. In April, Reuters determined the government's unfunded portion of its pension liabilities to total $43.2 billion—out of $45 billion. Meaning, Puerto Rico's pension shortfall stands at 96 percent.

Why is the shortfall so high? Because whenever Puerto Rico had money, it did not sock it away to prepare for employees' retirements:

Since Puerto Rico gained self-rule in the late 1940s, improvident populist governments have lavished additional pension benefits on public employees, from holiday bonuses to loans for international travel. These measures have rarely been accompanied by moves to pay for them, and occasional efforts to fill the funding gap have fallen short.

Puerto Rican leaders have been eternal optimists, "always thinking things would eventually improve," said [Francisco] del Castillo, 40 years old and now legal counsel to the Teachers Retirement System (TRS), one of two main public-employee pensions on the island. "But things continued to deteriorate, and deteriorate, and deteriorate."

Puerto Rico reformed its pension program in 2013, increasing retirement ages, contribution levels, and transferring employees to 401(k)-style programs. But these are solutions that help keep the debt from growing. It doesn't deal with existing debt. And what has happened is similar to what we've seen in New Jersey at the hands of Gov. Chris Christie. This reform requires that the government start making lump sum payments to reduce its pension debt. It was supposed to have paid $367 million by now. It has only paid $23 million. So the bomb kept ticking until it finally exploded.

The mess has put Puerto Rico in a situation where, like many bankrupt municipalities, it either has to screw over pensioners or screw over bondholders, or screw over both groups to a lesser degree. Oliver notes the complication that Puerto Rico is prohibited by federal law by filing for Chapter 9 bankruptcy. Veronique de Rugy warned against recklessly changing the rules here and what it would mean for the creditors who have purchased bonds to have the rules suddenly retroactively changed. Given that Oliver has cast hedge funds as the villains, one suspects he doesn't see the downside of this. George Will does, though, and recently warned that if Puerto Rico is allowed to find legislative ways to not have to deal with the consequences of its government's terrible behavior, we'll see badly managed states like Illinois attempting the same thing.

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  1. Wait, so John Oliver didn’t DESTROY something? I can’t even.

    1. John Oliver ANNIHILATES Puerto Rican Rethuglikkkans!

      1. WATCH JOHN OLIVER LITERALLY DECAPITATE THIS HEDGE FUND BILLIONAIRE!!!

      2. I like the new handle.

        I think you need a hyphen though. “Target-bathroom”

        1. There are only two things that get me off, Gilmore – tranny bathroom molestation and proper hyphenation

          1. I think it would be funny if someone started marketing a series of fake porn-videos =

            “Trans-Sexual Bathroom-Rape Volume 25: Big-Box Retailer Blow-Bang”

            …making sure to put the company logos on the cover alongside the unshaven shemales holding bottles of chloroform and lube

            1. What porn has a “cover” these days, G?

        2. I’m a freak, I like the girls with the boom, I once got busy in a Target bathroom….

          Just doesn’t work as well as Burger King

      3. Lauren Southern was way prettier than a bathroom rapist…

  2. It’s only time before they run out of rum.

    1. Venezuela beat them to it.

  3. Oliver made it sound like Puerto Rico was especially denied bankruptcy protection. Chapter 9 covers municipalities, so is there a bankruptcy protection chapter for state governments? Or is it just non-state territories that get left out?

    1. Nope. States can’t declare bankruptcy.

    2. No, there is no bankruptcy for state governments, and it looks like there is none for territorial governments, either, given the wording of this Bloomberg article.

      Allowing states to declare bankruptcy is a very bad idea. They shouldn’t even be allowed to issue bonds denominated in U.S. Dollars.

      1. Is it also a bad idea to let municipalities declare bankruptcy?

        1. Yes. But the Federal courts have basically discarded the original understanding that the municipalities are subordinate only to the States and turned them into Federal fiefdoms instead. They get to declare bankruptcy because they can be placed under U.S. administration. Not that this does any fucking good any more; the Federal courts neglected the entire premise of their legal superiority, i.e. protecting the obligation of debts and contracts, when Detroit’s bankruptcy occurred.

          The states remain nominally sovereign and so cannot be told what to do in fiscal matters by the Feds. They are still bound by Article I, Section 10 to honor their own obligations, which means that they must pay their debts, but how they will be expected to do this when they run out of money is beyond me. Like I said, they should not be allowed to denominate their debts in U.S. dollars.

        2. In some ways, it’s just an acknowledgement of reality. If the money isn’t there, it isn’t there.

      2. I was going to ask the same thing as Hugh. I’m not sure why allowing a state to declare Bankruptcy is uniquely worse than allowing a municipality to do so.

        What I mean to say is, it may not be a great idea to allow Munis to do it either.

        1. Put simply, the U.S. courts can take over a municipality and dictate its fiscal choices. They cannot do the same with a state.

    3. Chapter 9 allows for the bankruptcy of any subdivision of a “State” The debt is mostly held by subdivisions of Puerto Rico, not Puerto Rico itself. But it is not a “State” under the Bankruptcy Code so those subdivisions can’t reorganize the debt under Chapter 9.

  4. Sounds like a complete lack for foresight on the part of government officials.

    Of course, it’s difficult to see much when your heads are inserted rectally…

  5. We need to be very careful about what congress does in this case, because Puerto Rico is the test case every blue model state is looking at for their own salvation. Mismanaged states like Illinois, California, and my own state of “The People’s Republic of Connecticut” are all hoping that they can line up and ask the US tax payer to bail them out after decades of rigged budgets more concerned with buying the ruling blue political class elections than serving the people of the state. Meaningful reform will only come when the whole thing is allowed to crash & burn and we are forced to start over without the system where government has to be bought off for special favors.

    1. Yep. That’s why at this very moment, Block Yomomma and all his butt boys in the JournoList are putting the full court press on the weak, squishy Paul Ryan to cave in again. We’re going to be subjected to an endless barrage of sob stories in the days ahead about how the world as we know it will come to an end if we don’t fire up the printing presses on behalf of these goldbricking island layabouts.

      It’s imperative that the American people stand up and let their representatives in Congress know that if they fuck us over, they’ll be thrown into the political woodchipper.

    2. You got it, Alex.

      The next real conflict in our politics (sorry, Nick, where you shit doesn’t count) could very well be over bailouts of failed states and cities.

      1. I would replace that with the idea that our next real conflict in politics is how to deal with our demographics.

        The pension crises is going to get worse as Boomers retire, but so is SS and Medicare. All 3 are going to come to a head in the next 20 years, and that is when shit is going to become super nasty.

        But I do agree that it is vital to hold the line on Puerto Rico. And not just financially- it needs to be shouted from the rooftops that Dems ran Puerto Rico, and Chicago, and Detroit, and are the one party in power in many of the most ailing states. Look, if Trump can kills the Rs, I figure pensions should be a bullet for the Ds (and then… libertarian moment?)

        1. You’re right, but there’s a timing issue. I think the state and muni pensions will go bust before SS and Medicare.

          And, there’s an extra layer of us v them when bailing out states and munis. People in Texas, say, are going to be mega-pissed about bailing out Chicago, in a way they won’t be when SS and Medicare get restructured.

          1. Yes. But.

            There is the extra layer in the fact that public employees in ANY state are going to be pissed about SS/Medicare schemes being bailed out but not “their” retirement schemes. And these public employee fuckers are all unionized which usually means special treatment from federal courts, such as violence being legal. The courts basically say SS/Medicare are not legal obligations, but union contracts are.

            1. Well, the nice thing is that it may make it clear to most America that government workers are our Ruling Class when their grandma is eating cat food but a former DMV worker has a house in Bocca and gets a 5-6 figure yearly check from the government.

              1. That’s what grandma gets for being an evul capitalist.

    3. Oh no doubt. We have already heard the True Blue Believers talking about “helping” those pension funds more then once. California keeps bragging about their “balanced” budget which is a total house of cards. They are counting on something like a 7% return on investments solid and still even then Calpers retirement funding is unfunded liabilities. But California knows they will not have to pay the money cause good old uncle sugar daddy is gonna come in and save them. So they provide ever increasing benefits to public sector unions who in turn shovel that money back to the DNC. What angers my is the party of stupid or the Grand Old Coward Party will cave and go along with the bailouts cause the press will trot out some 75 year old retired wheelchair bound Kindergarten teacher to say she has to eat cat food.

  6. Puerto Rican leaders have been eternal optimists, “always thinking things would eventually improve,” said [Francisco] del Castillo, 40 years old and now legal counsel to the Teachers Retirement System (TRS), one of two main public-employee pensions on the island. “But things continued to deteriorate, and deteriorate, and deteriorate.”

    To quote a crusty old team guy I used to know, “Denial and optimism do not constitute a plan.”

    1. Wha? Hope & Change!!!!!

  7. These hedge funds purchased these bonds at fire-sale prices, want a return on their investment and as creditors have rights to try to get that return. They know Puerto Rico has very few to no options under US law — with its weird commonwealth status — to get rid of this debt without either a bailout from DC or a change in law.

    The original creditors who sold the bonds at fire-sale prices were idiots for providing PR this financing. The successive governments of PR were idiots for obtaining this financing. Everybody predicted that PR would have serious trouble paying back. The hedge funds are just taking advantage of other people’s stupidity.

    1. If PR and the leftists had a brain, they’d realize they should be on the same side as the hedgies.

      They all want a bailout, don’t they?

    2. The hedge funds are just taking advantage of other people’s stupidity.

      Not really. The hedge funds know default is inevitable, all they want is to negotiate how many pennies on the dollar to settle for.

      PR wants to give them zero pennies on the dollar. Otherwise they have to cut spending in order to pay 2 cents on the dollar. What PR wants is what Detroit and Mike Madigan want: to default 100% on their bonds yet get central government to give them money so that no pet projects get cut. (and they’re ALL pet projects)

      Bondholders and pensioners will be lucky to get 10 cents on the dollar, AND government budgets going forward will have to be cut by 80%. This could all be negotiated without courts involvement. But one side has no intention of negotiating in good faith. Guess which side? Hint: it’s not the side being cast as the villain by the state-slurping media.

  8. In this case, he sets his sights on the whipping boys who run hedge funds

    I think the vast majority of PR debt was not held by “Hedge Funds” but rather mutual funds, insurance companies, bond-ETF marketers, etc.

    basically, regular “plain-vanilla” buy-side investment firms. Not hedgies.

    In fact if hedgies played any significant role in that marketplace it would likely be as intermediaries in derivatives related to those bonds or the funds that held them (mostly “high-yield” muni bond funds, or higher risk ‘strategic income’ funds which hold baskets of higher-risk fixed-income products like distressed HY-munis, MLPs, preferred shares, CEFs etc)

    Hedgies might actually have benefited most from the shaky-condition the PR debt held, because it would have stimulated demand for the sort of OTC credit-default-swap insurance they help make markets for.

    I’m not sure this matters so much, but i see people talking about “hedge funds” the same way people routinely throw the term “neoconservative” around. Basically as a catch-all for some amorphous “evul capitalist!!” concept with little basis in reality (where neoconservative similarly just means “warmongers!”)

    basically = please stop doing that. As libertarians, we should at least pretend to have a better understanding of the world of high-finance plutocrats.

    1. I’m not sure this matters so much, but i see people talking about “hedge funds” the same way people routinely throw the term “neoconservative” around. Basically as a catch-all for some amorphous “evul capitalist!!” concept with little basis in reality (where neoconservative similarly just means “warmongers!”)

      This.

      1. Didn’t Chelsea Clinton work for a Hedge Fund? That job was bestowed upon her when the Clintons left office and they were so poor they had to beg for alms.

    2. That’s not the part of the story that Scott is focusing on.

      1. thank you for that valuable observation

        1. At least I kept my pointless point to less than 15 lines.

          1. Yes, you’re a very-succinct douchebag. Kudos.

            1. That’s gonna leave a mark.

            2. I believe this is normally HM’s gig, but oh, snap!

            3. #feeltheburn

    3. I think the vast majority of PR debt was not held by “Hedge Funds” but rather mutual funds, insurance companies, bond-ETF marketers, etc

      Through most of its life, probably. But, as they declined in credit quality, a lot of traditional bond investors get out (as they have limits on high risk assets). That’s when the distressed debt funds step in.

      And it’s an entirely legitimate function. As much as they get called “vultures”, a more apt description would be “financial salvage”. There’s going to be a lot of risk for bondholders – restructuring, delay of payment, etc. Distressed debt players provide liquidity for other investors and, more often than not, capital to the borrower when they’ve gone into default.

      1. Through most of its life, probably. But, as they declined in credit quality, a lot of traditional bond investors get out (as they have limits on high risk assets). That’s when the distressed debt funds step in.

        And it’s an entirely legitimate function.

        Yes, I know.

        Even so, i’d wager that very-large chunks of the junk paper is being held by firms that still aren’t technically “hedge funds”. Many are private equity firms, others are specialists, and many are still just plain-vanillas who’ve transferred holdings from their regular Muni-funds to their “super-junk” funds within the same family.

        My point was just about how people throw “Hedge funds” around as a proxy for “BAD CAPITALISM!!” rather than bothering to pay attention to the specifics of what’s actually going on.

        Its terminology mostly used by the left as a punching bag for anything even vaguely “wall st”. Its stupid.

        1. Point taken.

          I guess I was just acknowledging that a lot of this activity is through non-traditional players (pensions, insurance, etc.). And they perform a valuable service that a lot of people don’t “get”. Without these guys a lot of defaults/ bankruptcies/ restructurings would be a lot messier than they are. And the results would be a lot more damaging, even for the borrowers over the long run.

          1. should read…(other than pensions, insurance, etc.)

      2. There’s going to be a lot of risk for bondholders – restructuring

        PR is not allowed to do that by current US law. That’s one of the things (not mentioned) that makes this debt problem a real mess turning into a disaster.

  9. What is misleading in Oliver’s story is the assumption that what Puerto Rico’s government had been spending its money wisely and appropriately for the benefit of the populace it serves prior to this crisis.

    It’s helpful to remember John Oliver is Jon Stewart Lite. He’s playing to essentially the same audience and I’m guessing that blaming stuff on the pubsec unions is kind of verboten, but I might be wrong.

    1. I’m not sure Oliver knows enough to ask his writers about those aspects of this debacle.

      1. I’m not convinced Oliver asks his writers anything. My big problem with Oliver’s show is that it feels too scripted. The jokes and one-liners feel “prepared”. There’s a lack of spontaneity with Oliver’s delivery. Although from everything I’ve read, he’s way better than the dude who replaced Stewart.

        1. Low bar and all that…

      2. I’m pretty sure he doesn’t much care how PR spent the money.

    2. I dunno. Jon Stewart was occasionally actually funny.

      Oliver is always just an insufferable commie douche bag.

  10. Puerto Rico is prohibited by federal law by filing for Chapter 9 bankruptcy. Veronique de Rugy warned against recklessly changing the rules here and what it would mean for the creditors who have purchased bonds to have the rules suddenly retroactively changed. Given that Oliver has cast hedge funds as the villains, one suspects he doesn’t see the downside of this.

    Well, I’m all for a compromise! How about they be allowed to default on their debts and finance future spending plans through a tax on the income and assets of comedians who have ever been affiliated with The Daily Show and all of their progeny. In perpetuity.

    1. what it would mean for the creditors who have purchased bonds to have the rules suddenly retroactively changed.

      You increase the risk of a class of bonds, you increase the interest those bonds have to pay.

      For bonds already issued, their asset value goes down.

      IOW, changing the rules to benefit PR hurts investors and other states and municipalities.

      For Great Justice, amirite?

      1. In the absence of rules all you have is a perpetual repeat of czarist bonds (or 1840 Mississippi bonds which are still being pursued by a London group for payment) (or 1913 Chinese bonds). Bondholders who can pursue repayment from people who are multiple generations removed from being even remotely responsible for incurring the debt. And we aren’t that far removed from declarations of war and occupation of countries that default – in order to impose what amounts to little more than slavery-by-force.

        Odd (well not really – it’s actually completely predictable) that modern libertarians completely ignore the history of what happens in the international arena when creditors/debtors can’t have any way to settle their disputes peaceably.

        1. There’s plenty of government-held land on the island. Just start selling off the nice forest reserves around Boquer?n, and using the proceeds to fund the pensions. PR gets its money, the workers get their pensions, and the fund managers get some very nice tropical estates. Everybody’s happy!

  11. Maybe Puerto Rico can have a revolution, throw out the American devils, and make Bernie their new comrade numero uno. Then they can become a miraculous wonderland like Cuba and Venezuela. Viva la Revolucion! $15 an hour minimum wage, free college, free healthcare, free ponies, free bee… oh shit, we ran out of beer.

  12. I don’t really see the downside to allowing PR to BK. Private creditors take a bath and credit markets are forever closed to PR. Where is the taxpayer losing in this deal?

    1. Many of the 4 million Puerto Ricans, who are U.S. citizens, coming here and needing government benefits?

      1. Is that it? I’ll take that deal. An influx of cheap labor in exchange for no stabilization bailout.

    2. Where is the taxpayer losing in this deal?

      If the taxpayer holds any muni or state bonds, those will be devalued to some extent.

      Plus, the interest on future issuances of muni and state bonds will be higher, so they’ll take it in the ass there, too.

      1. I’m not sure devaluation due to a PR/BK law change is “take it in the ass” territory for munis with good ratings.

        1. The effect will vary, but the risk on all state and muni bonds will increase, with corresponding decreases in asset value and interest. The effect will probably be larger on state bonds, but I would expect munis to get hit, too.

    3. Private creditors take a bath and credit markets are forever closed to PR.

      Win-win.

      Puerto Rico’s government for ever after has to live within it’s means.

  13. Meanwhile, speaking of massive levels of unpayable debt, it’s looking more and more like the execrable Jack Lew is once again fudging our own debt numbers after the debt skyrocketed by a trillion dollars in less than five months starting last October 30. We’ll know for certain once the official numbers come out later this afternoon.

    1. Of course he did. The Treasury didn’t issue a penny of debt for months until the budget deal. Probably around half, maybe more, of that $1TT was the Treasury re-cooking the books from last fiscal year.

  14. Managing a hedge fund is an improper way to make a living. However, making a living as an actor or a comedy writer is certifiably proper.

  15. Oh, my beloved Borinquen. Beautiful island, lovely people, but on a governmental level it’s a place that combines some pretty bad tendencies of both US and Latin American governments. The primary problem with Puerto Rico’s *debt* is that it pays out to too many corrupt cops and bureaucrats. The public sector in PR is massive, and costly. The proble with PR’s *economy* is a combination of illiberal economic laws and being tethered to a whole load of stupid federal policy making unemployment a constant problem on the island.

    The PR version of the Republicans was until recently doing well at winning elections in traditionally Democrat territory and they had the right idea on economic reform, but they went too fucking fast. Now there’s nothing but to wait and see what happens when PR and its creditors play chicken.

    1. I thought about whether I should bring up the fact that PR’s police department is so corrupt it’s one of only five LEO’s suspended from participating in the federal asset forfeiture program, but I figured it would distract too much from the central issues.

      1. Deserves it’s own article

    2. My Borinquen can learn from the Starnesville story in “La Rebelli?n de Atlas”: They told us that this plan would achieve a noble ideal. Well, how were we to know otherwise? Hadn’t we heard it all our lives?from our parents and our schoolteachers and our ministers, and in every newspaper we ever read and every movie and every public speech? Hadn’t we always been told that this was righteous and just?
      Looter politicians hustled a bunch of lazy altruists into mooching off of each other, and all are getting exactly what they deserve. For the past year I have been trying to locate el Partido Libertario de Puerto Rico, and cannot find it. As near as I can tell the island, like Cuba, has no libertarian party. The only politics known there are Herbert Hoover prohibition, Catholic National Socialism and Stalinist Communism.

  16. RE: ? It’s Not Hedge Funds That Caused Puerto Rico to Fail to Manage Its Debts
    Those who call for aid shouldn’t ignore where the territory’s money actually went.

    Of course we should forget where the territory’s money actually went.
    Otherwise people will find out the money went to some numbered offshore account in the PR’s politicians’ names.
    But don’t worry.
    The dumb ass republicans and democrats will grant PR more money.
    Then all will be well.

  17. Puerto Rico is going to lose a crap-ton of tourism revenue as Cuba opens up. That won’t help matters very much.

  18. I went there for vacation in early December. They’re renovating what I think is the capital building. Tons of granite and marble. Gold statues. Across the street, a dilapidated apartment house that has been empty for months. New cop cars. I’m talking fleets of 2015 fords. New bmw motorcycles. Every gov building looks like they’ve got cash. Every building next door looks like it might have been in a small arms battle in a recent small war.

    I remarked to my friend that it looks like how out aid works out in the third world. The leader gets a new house and car, the people still starve.

    1. Sounds like Cuba already. A colleague recently went there and took a crapload of pictures.

      What. A. Shithole. Honestly, people say someplace looks like a warzone as a cliche, but Havana really does look like its coming off of a civil war.

      1. I might have embellished a bit on that part. You can street view there, it’s a site to behold.

      2. They had to fly in a Euro crew to make the big cathedral in Havana presentable.

        Naturally, they only cleaned the front, because that’s all the cameras would see. The sides and back are still black with grime and spattered with garbage.

    2. I remarked to my friend that it looks like how out aid works out in the third world.

      This is how a credit bubble ends. The looters go berserk in the final moments before the credit card is canceled.

      In for a dime of of bankruptcy, in for a dollar.

    3. Yes… that’s the way it also is in Venezuela, Brazil, Argentina and US-occupied Ecuador. Uruguay finally has a libertarian party and is at least exposed to alternatives to communo-fascist totalitarianism, but it is not a pretty sight. The capital of Brazil this week is literally pullulating with televangelist antichoice zombies out to impeach the president and collectivist lobbyists are everywhere whoring after political pull, pelf and boodle. Everything requires bribery and bureaucrats and by law you can’t even buy an electric wall plug other than the kind sold in Vichy France.

  19. I sat through an episode of John Oliver a few months back, that a friend wanted to watch. That guy is so funny on Community and so smug douch EVERYWHERE else

    1. As punchable a face as you’ll ever see.

  20. TRUMP TO PUERTO RICO, ILLINOIS: DROP DEAD

    1. If Trump would actually say something like that and stick by it, I might be willing to tollerate electing him for 4 or so terms. By that point Hillary and Bernie will hopefully have finally kicked it and we can have someone else run.

  21. I’m shocked…shocked!…that John Oliver would present an incomplete picture in order to slant his story.

    Did he learn Stewart’s trick of claiming he’s just a comedian when getting called on his BS?

    1. Yes. They all learned that.

  22. PR’s pension funds are still in better shape than our SSI system. With SSI the bondholders are the pensioners. If you paid in $100 to SSI and are now ready to retire in order for the government to pay you a $100 check it has to take that money from someone else, so your $100 benefit check cost over 200 tax dollars.

  23. The mess has put Puerto Rico in a situation where, like many bankrupt municipalities, it either has to screw over pensioners or screw over bondholders, or screw over both groups to a lesser degree.

    I doubt that it is either/or. I doubt they have the on going revenue to fulfill either obligation.

    If Puerto Rico is to deal with it’s finances, and not just get bailed out by Uncle Sam, it needs to declare bankruptcy, ruin its credit rating, and move on, living within its means. The only balanced budget amendment that will work is a destroyed credit rating, where no one will loan them money.

    Not a penny of federal money for a bailout. If investors make bad bets, they eat it when the bill comes due.

    1. Of course, bankruptcy and restructuring won’t happen.

      The Feds will bail them out.

      It will be EU and Greece. Brinksmanship, but everyone in government has the interest in kicking the can down the street, so the crash doesn’t happen on their watch. Partial bailout, partial haircuts, and the prospect of doing it again in a year. Or six months.

  24. I like Oliver’s comedy a lot. And when there’s no conservatives to blame for things, he’s pretty informative. But yes, I couldn’t believe how one-sided his look at Puerto Rico was when I saw it on Youtube a day or two ago.

  25. They spent it forward on PE unions/members, who now scream like Bloody Hell that they might have to give some of their ill-gotten wealth back.
    Same Old……

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