Read the article and look at the numbers. Those numbers are the underlying facts staring us in the face as politicians and the people who elect them continue to believe passionately in spending money they don't have and never will. Sometimes that ends in anarchy but mostly it ends in the worst form of tyranny this planet has ever seen.
--Democrat Governor Alejandro Garcia Padilla told Bloomberg News last year that Puerto Rico had a constitutional and moral obligation to not default on the island’s $73 billion of debt. But he just passed a law giving local court proceedings the power to cancel much, or all, of the island’s bond debt.
--Puerto Rico's economy is shrinking at a 6% annual pace.
--"Of their $73 billion of debt, $56 billion is in the form of municipal bonds and a quarter of that is held by unsuspecting investors in their tax-free mutual funds. On a per capita basis, that debt burden works out to $14,000 per resident; 10 times the average of the 50 states and higher than every state except California and New York."
-- "In addition to debt, Puerto Rico also has a public employee pension plan that is only 11.2% funded. The current $30 billion in unfunded pension liabilities would add another $6,000 in per capita liability to each Puerto Rican resident."
The original article is pitched in such a way as to lay the blame for Puerto Rico's problems on an inability to speak and read English and claims 90% of the population cannot do either. I don't think that has anything to do with the problem they find themselves faced with today. The problem as I see it, is that we have people trading in bond markets that suffer no penalties at all for lying or failing to do their fiduciary duty to the people and institutions they sell them to. The people that bought and traded all those worthless bonds should be sliced up and used to chum for sharks in Long Island Sound.
The numbers are bad for Puerto Rico. One might almost say that the situation is hopeless. On the other hand, this is what it looks like for the United States in comparison with other leaders in the shameful national debt category:
You could read more about it at The Atlantic and oddly, another article in another Atlantic.
Can you imagine the day when everybody repudiates their debts as unpayable? If Europe goes over the edge it will make everybody follow. I think the last time that happened was 1929. This sort of charade is only viable as long as the major powers say that it is. The first to collapse will take down all the rest. That is why, even the utterly insolvent United States Government, raced to send trillions of dollars to prop up the EU banks that were going under as the Euro failed in all the countries to the left of US.
6 comments:
Kind of sounds like what the Democrats did to Detroit.
I wondered about the thrust of the Breitbart article, concentrating as it did on English. I also found an error: they claim "Although many states have designated English as an official language and no state has designated Spanish as an official language..." Not true; Spanish IS an official language in New Mexico. That drives me nuts.
I think your last graphic on the relative size of per capita debt is VERY damned scary.
I can't understand how people can be so blind that they can see what happens when the money runs out, and don't do anything to stop it. Not only do they keep voting to destroy the future, they revile people who try to stand up and say, STOP!
I don't know why the author/editor felt compelled to make the economic situation revolve around the language spoken there. My understanding of history is that Spanish is not really conducive to Western government but that can also be said of most other languages so I don't think it is that big a factor in the situation they Puerto Ricans have put themselves in. As you said, our situation is no less dire. I think all the Central Banks in the entire world are keeping the interest rates so ridiculously low is due to the fact that a 2 or 3% rise in rates would instantly bankrupt 80% of the world's governments. They'd be compelled to default because the money to pay interest on the loans ISN'T THERE and never will be in the lifetime of their grandchildren's children. They impoverished the future generation and the next and the next and the next. Historically, that always leads to revolution and war. HUGE revolutions. Huge wars.
When one of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) of the European Union defaults on their massive loans to revert back to their own currencies, we will then see the socialist European Union collapse like a deck of cards. Such a collapse will reek havoc on the open market in Europe, which will have a knock on effect globally that will bring China close to crumbling, as all trade with the dragon will cease overnight, with contracts and debt left hanging in the breeze. Thank Gawd for the British £ Sterling... Sadly the knock on effect will be a war some where around the globe, followed by many bush wars there after.
It would be nice to think that people are smarter than the folks involved in the Black Wednesday fiasco...and NO I don't mean people like George Soros. I'd hope the government hired a few brilliant men and listened to them for a change. And yeah, the knock-on effect is going to bring all of us down. If Europe goes, so will China but so will we at which point we'll be able to repudiate our debts just like everybody else and we'll all live in the poor house for a generation.
Where it looks bleakest for Europe is that all of NATO that attacked Libya during the Arab Spring expended 100% of its modern ordnance in just a month or so and had to beg for resupply from American arsenals, again. We at least, come the wars, are going to have an enormous stockpile of weapons.
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