Wall Street Vultures Descend On Debt-Ridden Puerto Rico 1


Global Research has the article Wall Street Vultures Descend On Debt-Ridden Puerto Rico. This is an interview with Déborah Berman-Santana.

DBS: With the eventual elimination of industrial tax incentives beginning in the 1990s, Puerto Rico’s governments increasingly looked to loans to balance its budget and continue practices of rewarding political cronies with contracts for large infrastructure projects. Subsequently, President Clinton’s elimination of the Glass-Steagall Act allowed for investment bankers to increasingly engage in bond market speculation. Puerto Rico received “triple exemption” because of its colonial status, which meant that every pension fund and every municipal and state government, among others, bought Puerto Rico bonds, ignoring the fact that its economy began shrinking once the special industrial exemptions were completely eliminated in 2006.

Election of a protégé of the Koch Brothers, Luis Fortuño, as Puerto Rico’s governor in 2008 resulted in a “bitter medicine” law that eliminated tens of thousands of public jobs, which accelerated the descent of an economic recession into a depression. By 2011 the major credit agencies began degrading Puerto Rico’s ratings, with the result that it increasingly resorted to short-term, high interest loans similar to “payday loans.” Bondholders increasingly unloaded their Puerto Rico bonds in the secondary bond market, which were then swooped up by vulture funders such as Paul Singer and John Paulson – often at 10 to 20 percent of the bond’s value. Today, these vulture funders possess up to 50 percent of Puerto Rico’s public debt, and are the creditors who are least willing to renegotiate the terms of the loans. They have been the major lobbyists for the Congressional law known as “PROMESA” that recently became law.

I was challenged recently to put up a link to back up my claim that Wall Street was responsible for duping Puerto Rico into its current debt situation. I did a brief Google search on Wall Street War on Puerto Rico to come up with the article above.

As I get further and further into the article it only gets worse for Puerto Rico. Here is the reaction to the question about the similarities between Greece and Puerto Rico.

DBS: I would say they are strikingly similar, and in fact that the same playbook is being used in both countries, despite the differences between them. For example, the acronym TINA, “There Is No Alternative” to continued policies of austerity, privatization, and increased taxes in order to pay off an unsustainable public debt, is constantly repeated, as is the myth that “There is no Plan B,” and that political independence for both (in Greece’s case, leaving the European Union and the eurozone) would be disastrous — as if U.S. and EU colonial rule is not already a disaster! In Greece there is already a junta de control fiscalnamed by the EU which must approve — and often even write — laws that the Greek government must implement, such as automatic budget cuts and further privatizations. While as a classic colony Puerto Rico cannot officially deal with the IMF, in practice the PROMESA bill follows the IMF playbook, as was prescribed by “former” IMF officials who were hired by the Puerto Rican government — as ordered by their masters in Washington — to produce a report with recommendations for dealing with the debt crisis. In addition, you see “vulture capitalists” such as Paul Singer and John Paulson swooping into both Greece and Puerto Rico to buy up assets such as banks and land, plus debt — at a discount. The fact that Puerto Rico is a classic colony actually makes the problems of lack of sovereignty much clearer. Greece is still officially an independent country, so for some people its de facto colonial status may not be quite as clear. Also, the problem of equating national sovereignty with fascism is particularly acute in Greece as a European country. In Puerto Rico we have some of that confusion, but it is not as strong since in general Latin Americans, including Puerto Ricans, understand the necessity for national sovereignty as part of anti-colonial struggles.


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