Category Archives: default

Obama Appoints Board to Restructure Puerto Rico’s Debt – the New Greece?

 

Earlier this summer Puerto Rico which is $70 billion plus in debt defaulted (third default) on $779 million worth of general obligation bonds. The day before Barack Obama signed into legislation, Puerto Rico Debt Crisis Bill aka PROMESA (Puerto Rico Oversight, Management, and Economic Stability Act) which will undoubtedly lead to U.S.-imposed austerity measures on the federal territory.

Tasked with overseeing Puerto Rico’s debt problem is the Financial Oversight and Management Board for Puerto Rico, a bipartisan group of seven individuals, four of whom were selected by House Speaker Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky. And the remaining three by Obama.

The appointees are:

  • Andrew G. Biggs* – resident scholar at the American Enterprise Institute and former deputy commissioner in the Social Security Administration;
  • Jose B. Carrión III* – a native of Puerto Rico, president and principal partner of HUB International, an insurance brokerage firm in Puerto Rico;
  • Carlos M. Garcia* – CEO and founder of BayBoston Managers LLC and board chairman of Caribbean Financial Group Holdings, L.P.;
  • Arthur J. Gonzalez** – retired Chief Judge of United States Bankruptcy Court, Southern District of New York, Senior Fellow at New York University School of Law (NYU) and former adjunct professor at NYU;
  • José R. González**– Chief Executive Officer and President of Federal Home Loan Bank of New York (FHLBNY);
  • Ana J. Matosantos**– President of Matosantos Consulting, former Director of California’s Department of Finance, former Chief Deputy Director for Budgets and former Deputy Legislative Secretary for Health and Human Services and Veterans Affairs.  All positions were with the debt laden state of California; and
  • David A. Skeel Jr.* – corporate law professor at the University of Pennsylvania Law School.

*Republican appointees.
**Obama appointees

In addition to restructuring Puerto Rico’s $70 billion debt, according to a White House press release, the seven member board which  has been dubbed by Communists recognizing an opportunity the “colonial control” board, would oversee collaborate with the government of Puerto Rico to “create the needed foundation for economic growth and to restore opportunity to the 3.5 million Americans of Puerto Rico….”

The CBO estimated the cost to American taxpayers of operating the Oversight Board for Puerto Rico is $370 million covering the fiscal period 2017 to 2022.

Obama’s Oversight Board will be charged with “powers to approve, for territory governments or instrumentalities of those governments (such as public corporations or municipal governments):

  • Fiscal Plans;
  • Budgets;
  • Voluntary agreements with bondholders;
  • Debt restructuring plans; and
  • Critical projects eligible for expedited permitting processes.

screenshot puerto rico debt crisis

The citizens of Puerto Rico are outraged, not at its government spending and corruption (this week anyway) but that the legislation passed along with the creation of an oversight board “to rule over Puerto Rico” not elected by the citizens of Puerto Rico will make decisions that are not in the interests of Puerto Rico and its citizens.

TeleSurTV

The idea of a Republican-imposed fiscal control board, known colloquially as La Junta in Puerto Rico, is largely reviled on the island.

Opponents argue it will be oblivious to the social needs of Puerto Rico and impose harsh austerity measures, including severe cuts in public services and pension funds. …

U.S. Senator Bernie Sanders called the PROMESA bill “both a political and economic disaster for the people of Puerto Rico” that “takes away their democratic rights and self-governance and will impose harsh austerity measures, which will make the poorest people in Puerto Rico even poorer….”

[Those evil Republicans how could they? What about the three Progressives appointed by Barack Obama?]

Hundreds or dozens (depending on whom you ask) took to the streets of Puerto Rico Wednesday to protest Obama’s legislation and the installation of his oversight board thru 2022.

screenshot of protest against oversight board created by barack obama to tackle Puerto Rico's debt crisis 2_Fotor COMPRESSED

Protesters threw rocks and bricks as they blocked the entrance to the San Juan’s Condado Plaza Hilton hotel where members of the board were attending a gathering organized by the National Puerto Rico Chamber of Commerce (CCPR).

A viewpoint as told by Democracy Now blaming capitalism and the evil United States.

On Wednesday, hundreds of protesters in Puerto Rico blocked a street in front of a hotel where bankers and business executives were gathering for a conference hosted by the Puerto Rico Chamber of Commerce. Meanwhile, a new report from the ReFund America Project has revealed firms like UBS, Citigroup, Goldman Sachs and Barclays Capital have collected $1.6 billion in underwriting fees from Puerto Rico since 2000 just for refinancing bonds to pay interest and fees on older bonds….

Read full article

The result of failed social engineering policies, government dependency that morphed into an entitlement mentality of the masses, government spending and corruption put Puerto Rico on this road to austerity.  A long time coming, this can get ugly for both Puerto Rico and the United States.

 

Image:  Flag of Puerto Rico (San Juan) courtesy of Ricardo Mangual-Flickr (CC  BY 2.0)

Cross-posted on PumaBydesign001’s Blog.

 

Gearing Up for Debt Ceiling Debate

Post-Apocalypse-US-Capitol

At some point in October of 2015, the Obama Administration will ask for yet another Debt Ceiling increase under threats of some inevitable apocalyptic federal default on the national debt. Obviously, we’ve been here before; and I think we all know what John Boehner, Mitch McConnell and President Obama intend to do. President Obama will threaten to deliberately default on the national debt (as opposed to activating immediate reductions in spending, as any American Household would have to do after maxing out their credit cards). Boehner and McConnell will run around Washington parroting Obama’s threat of  a national default, as if it was both inevitable and necessary. They will force their representatives in the House and Senate (the ones elected by us, but who never seem to represent us) to increase the debt limit.

Ted Cruz, Mike Lee, Rand Paul, Jim Jordan, Dave Brat, Thomas Massie, Justin Amash, and Mark Meadows will try to force the issue, prevent an increase in debt, and be vilified by the Republican and Democrat parties. The media will run story after story about how any debate on raising the debt limit will hurt the Republicans chances in 2016 (and why Republicans listen to Democrats in the media with regard to what is good for the Republican Party in midterm and Presidential elections is still well beyond me!). The debt limit will be raised once again, with no end in sight and no hope of fiscal responsibility from this government in the future.

I will throw this fact out there for nothing: If the government increases our debt and our spending, ad infinitum, our money will eventually be worth a great deal less than it’s worth today. Maybe the dollars we do have, today, would be well spent on financing the campaigns of representatives like Dave Brat, Justin Amash, Thomas Massie, and Mark Meadows (and all the rest of the good guys out there). Just saying.

We need to offer up alternative plans today, which can be repeated in October. We can’t afford to wait to October to offer alternatives because it will reek of showmanship and grandstanding. If we offer up alternatives today, however, it is not like the House of Representatives wouldn’t have had the time to think about it.

We could come up with a five point plan to stave off a debt increase. We could immediately defund Planned Parenthood and end all corporatist subsidies and loopholes which, while helpful to well-connected corporations who purchase a plethora of politicians to ensure low levels of free market competition, do very little for the average American citizen. We could immediately end 30, 40, or 50 nonessential federal programs and studies. We could lay off thousands of federal employees through the end of the fiscal year. We could reduce or end foreign aid to anti-American countries. We could use this opportunity to stick a final fork in the Export-Import Bank.

There are a thousand ways our government could save money if they wanted to save money. We could offer bonuses of up to $250,000 a year to bureaucratic department heads for coming up 5% under budget. The options are endless. If only we considered any options whatever.

Let’s reach out to our Congressmen and Women in the House of Representatives today and ask them what we might do to reduce spending in order to stave off increasing the debt limit. Let’s ask to see legislation and amendments brought to the floor when Congress comes back from recess.

I also would like to hear every Virginia Congressman state publicly, in Newspapers or on Television, that the debt ceiling is not inevitably tied to a default on our national debt, that a default on our national debt could only occur by direct executive action out of the White House. It’s true. People should know that.

At the very least, we should tie this vote on a debt ceiling increase to spending cuts and cuts to waste, fraud, and abuse, tied with a bow of a congressional promise to never request a debt limit higher than the one before us today. Let’s make this debt ceiling increase the last debt ceiling increase in our nations’ history. We need to begin to lower the debt ceiling, not raise it. The ideas must start coming out tomorrow. Or Sunday, if any of our faithful politicians by chance have spots on our meaningless Sunday Shows.


Article written by: Steven Brodie Tucker