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How Socialism Destroyed Puerto Rico, And Why More Defaults Are Looming
With Puerto Rico missing a payment on a bond overnight "due to non-appropriation of funds" but denying that this constitutes anything close to a default, the territory may be about to retake the limelight as Greece is now "fixed." As MarketWatch reports,
The missed payment could have serious implications for holders of Puerto Rico bonds, “as the signal from breaking a seven-decade streak of bond payments may imply more defaults are looming,” Daniel Hanson, an analyst at Height Securities, said in a note.
Not all Puerto Rican bonds are created equal, being backed by different types of revenues, such as tax revenues, road tolls, electricity bills etc.
The first thing investors should do is “find out what revenue backs their bonds and whether their bonds are insured or not,” said Mary Talbutt, head of fixed income at Bryn Mawr Trust.
Approximately 30% of muni mutual funds have holdings in Puerto Rico, more than half of which are insured, according to a Charles Schwab Investment Management report. As for the revenue that backs the bonds, most exposure is with the sales-tax backed bonds, known as COFINA bonds from their Spanish-language acronym, and the general-obligation bonds, known as G.O. bonds, according to the report.
In that sense, investors that hold the PFC bonds are somewhat in a bind because “the language in PFC bonds makes payment dependent on appropriations from Puerto Rico’s legislature,” Hanson said.
This is the main difference between the PFC bonds and the G.O. bonds. The former require appropriation, while the latter are backed by the full faith and credit of the territory and their repayment is guaranteed by the constitution.
“The language... makes [the PFC bonds] a weaker credit relative to G.O. bonds. But a default is still a default,” said Andrew Gadlin, a research analyst at Odeon Capital Group.
This has investors worried about other types of bonds that face a repayment deadline, most notably those issued by the island’s Government Development Bank (GDB).
“The market is becoming more skeptical of the payments due August 1 on GDB debt, though the budget does set aside funds for paying these obligations,” Gadlin said.
And as Euro Pacific Capital's Peter Schiff explains, this is far from over
While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.
The U.S. has bombed the territory of Puerto Rico with five supposedly well-meaning, but economically devastating policies. It has:
- Exempted the Island's government debt from all U.S. taxes in the Jones-Shaforth Act.
- Eliminated U.S. tax breaks for private sector investment with the expiration of section 936 of the U.S. Internal Revenue Code.
- Required the nation to abide by a restrictive trade arrangement.
- Made the Island subject to the U.S. minimum wage.
- Enabled Puerto Rico to offer generous welfare benefits relative to income.
While passage of such politically popular laws seems benign on the surface (and have allowed politicians to claim that their efforts have helped the poorest Puerto Ricans), in reality they have deepened the poverty of the very people the laws were supposedly designed to help. The lessons here are so obvious that only the most ardent supporters of government economic control can fail to comprehend them.
Tax-Free Debt
By exempting U.S. citizens from taxes on interest paid on Puerto Rican sovereign debt, Washington sought to help the Puerto Rican economy by making it easier and cheaper for the Island's government to borrow from the mainland. As a result, Puerto Rican government bonds became a staple holding of many U.S. municipal bond funds. As with Fannie Mae and Freddie Mac bonds a decade ago, many investors believed that these Puerto Rican bonds had an implied U.S. government guarantee. This meant that the Puerto Rican government could borrow for far less than it could have without such a belief. However, this subsidy did not grow the Puerto Rican economy, but simply the size of the government, which had the perverse effect of stifling private sector growth.
In contrast to the tax-free income earned by Americans who buy Puerto Rican government bonds, those with the bad sense to lend to Puerto Rican businesses were taxed on the interest payments that they received. Businesses could have used the funds for actual capital investment (that could have increased the Island's productivity), but instead the money flowed to the Government which used it to buy votes with generous public sector benefits that did nothing to grow the Island's economy or put it in a better position to repay. That problem was left for future taxpayers who no politician seeking votes in the present cared about.
This dynamic is almost identical to what happened in Greece, where low borrowing costs, made possible by the strong euro currency and the implied backstop of the European Central Bank and the more solvent northern European nations, permitted the Greek government to borrow at far lower rates than its strained finances would have otherwise allowed.
Taxing Private Investment
Perversely, as the U.S. government made it easier for the Puerto Rican government to borrow, it made it harder for the private sector to do so. In 2006 the government ended a tax break that exempted corporate profits earned on private sector investment in Puerto Rico from U.S. taxes. As a result, U.S. businesses that had been making investments and hiring workers on the Island pulled up stakes and moved to more tax-friendly jurisdictions. The result was an erosion of the Island's local tax base, just as more borrowing (made possible by triple tax-free government debt) obligated the remaining Puerto Rican taxpayers to greater future liabilities.
The Jones Act
The Jones Act, a 1920 law designed to protect the U.S. merchant marine from foreign competition, has had a devastating effect on Puerto Rico, and should be used as a cautionary tale to illustrate the dangers of trade barriers. Under the terms of this horrible law, foreign-flagged ships are prevented from carrying cargo between two U.S. ports. According to the law, Puerto Rico counts as a U.S. port. So a container ship bringing goods from China to the U.S. mainland is prevented from stopping in Puerto Rico on the way. Instead, the cargo must be dropped off at a mainland port, then reloaded onto an expensive U.S.-flagged ship, and transported back to Puerto Rico. As a result, shipping costs to and from Puerto Rico are the highest in the Caribbean. This reduces trade between Puerto Rico and the rest of the world. Since a large percentage of the finished goods used by Puerto Ricans are imported, the result is much higher consumer prices and fewer private sector jobs. Even though median incomes in Puerto Rico are just over half that of the poorest U.S. state, thanks to the Jones Act, the cost of living is actually higher than the average state.
The Federal Minimum Wage
In 1938 the Fair Labor Standards Act subjected Puerto Rico to a federal minimum wage, but it was not until 1983 that a 1974 act, which required that the Island match the mainland's minimum wage, was fully phased in. The current Federal minimum wage of $7.25 per hour is 77% of Puerto Rico's current median wage of $9.42. In contrast, the Federal minimum is only 43% of the U.S. median wage of almost $17 per hour (Bureau of Labor Statistics (BLS), May 2014). The U.S. minimum wage would have to be more than $13 per hour to match that Puerto Rico proportion. The disparity is greater when comparing minimum wage income to per capita income.
The imposition of an insupportably high minimum wage has meant that entry level jobs simply don't exist in Puerto Rico. Unemployment is over 12% (BLS), and the labor force participation rate is about 43% (as opposed to 63% on the mainland) (The World Bank). A "success" by the Obama administration in raising the Federal minimum to $10 per hour would mean that the minimum wage in Puerto Rico would be higher than the current medium wage. Such a move would result in layoffs on the Island and another step down into the economic pit. I predict that it could bring on a crisis similar to the one created in the last decade in American Samoa when that Island’s economy was devastated by an unsustainable increase in the minimum wage.
It will be interesting to see if our progressive politicians will have enough forethought and mercy to exempt Puerto Rico from minimum wage increases. But to do so would force them to acknowledge the destructive nature of the law, an admission that they would take great pains to avoid.
Welfare
In 2013 median income in Puerto Rico was just over half that of the poorest state in the union (Mississippi) but welfare benefits are very similar. This means that the incentive to forgo public assistance in favor of a job is greatly reduced in Puerto Rico, as a larger percentage of those on public assistance would do better financially by turning down a low paying job. Because of these perverse incentives not to work, fewer than half of working age males are employed and 45% of the Island's population lived below the federal poverty line (U.S. Census Bureau, American Community Survey Briefs issued Sep. 2014). According to a 2012 report by the New York Federal Reserve Bank, 40% of Island income consists of transfer payments, and 35% of the Island's residents receive food stamps (Fox News Latino, 3/11/14).
In other words, Puerto Rico's problems are strikingly similar to those of Greece. Its government spends chronically more than it raises in taxes, its economy is trapped in a regulatory morass, and its economic destiny is largely in the hands of others.
* * *
Puerto Rico’s economy and population have been shrinking for almost a decade, and debts have ballooned to about 100 per cent of its gross national product as the government took advantage of the tax exemption enjoyed by US municipal debt.The Puerto Rico Electric Power Authority is already restructuring $9bn of bonds and loans.By September 1 Puerto Rico is expected to deliver a plan for turning round its finances. Officials have called for patience from creditors about how its various bondholders will be treated.
Patience... indeed.
* * *
The solutions to Puerto Rico's problems are simple, but, Peter Schiff warns, politically toxic for mainland politicians to acknowledge.
Puerto Rico must be allowed to declare bankruptcy, the Federal incentive for the Puerto Rican government to borrow money must be eliminated, Puerto Rico must be exempted from both the Jones Act and the Federal Minimum wage, and Federal welfare requirements must be reduced. Puerto Rico already has the huge advantages of being exempt from both the Federal Income Tax and Obamacare, so with a fresh start, free from oppressive debt and federal regulations, capitalism could quickly restore the prosperity socialism destroyed.With the current incentives provided by Acts 20 and 22 (which basically exempt Puerto Rico-sourced income for new arrivals from local as well as federal income tax - see my report on America's Tax Free Zone) and with some additional local free market labor reforms, in a generation it's possible that Puerto Ricans could enjoy higher per capita incomes than citizens of any U.S. state.
If Washington really wanted to accelerate the process, it should exempt mainland residents from all income taxes, including the AMT, on Puerto Rico-sourced investment income, including dividends, capital gains, and interest related to capital investment.
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Is that a dude?
Maybe?
But it seems he wants to socialize the losses of his dumb ass idea on the people to pay the banks.
Forward comrades!
More imagination at interest...tm
Why is Puerto Rico a commonwealth and a state? SRI Service of revenue internal...awesome
RIPS
And there's a good chunk of American idiots who want to double down with Sanders!!!! God help us
And which Libertarian candidate with zero shot at winning do you support?
Exactly. Politics is all theatre. Why even care? Look what it got the Greeks. It's probably worse here because we are closer to the shitheads in charge.
Wouldn't it be awesome if there was a path where the poor can run for office for free, so that the wealthy aren't permitted to lay their partial opinions on our backs to work for in the form of tax payments to sustains their champagne democracy / socialism that none of us get to enjoy?
It's time to wake up to the agenda of the oligarchy fast, the net is closing all around us now!
http://galeinnes.blogspot.com/2015/07/the-awakening-of-technology.html
The Jones Act explanation is not correct really. Chinese boats can deliver goods direct to P.R.... A foreign boat just cant pick up goods already in or made in the US and go to P.R. though. the Jones Act is an abomination though. It artificially keeps transport cost high for the entire US not just P.R... Bulk goods going from US city to US city must go via train or truck.....mostly train. Jones Act was passed to protect the railroads, not shipping
It's not socialism, it's the same old banker game. Get a friendly government in, load country up on debt, squeeze the shit out of them, exchange bullshit debt for tangible assets and then deregulate the labour force. Literally the same shit over and over and people still pretend its socialism. Yeah, they been living real high off the hog in puerto rico!
The lawyers are about to get filthy rich running this shit show through the courts on behalf of the vulture funds over the next God knows how many years.
And Schiff should worry less about the evils of socialism and more about his shitty overpriced mutual funds.
http://www.morningstar.com/funds/XNAS/EPIBX/quote.html
http://www.morningstar.com/funds/XNAS/EPIVX/quote.html
All economies are psychological creations. Please, anyone, tell me of one that has been wholesome, legitimate, or decent to humanity...ever.
A good one bunz..and food for thought.
That's capitalism: nobody gives a fuck and is out to steal each other blind, why should I give a fuck. Fair enough, but it is crucially important to have referees during the cagefight. This gives the fight legitimacy. But the regulators however have been bought. Chaos is upon us.
Good post. Same shit over and over again. It should be taught to kids as part of the National Curriculum - even then would people care as long as they got an Obamaphone!
from the article:
Its government spends chronically more than it raises in taxes, its economy is trapped in a regulatory morass, and its economic destiny is largely in the hands of others.
Seems like the author doesn't even believe his 'socialism is the culprit' indicated in the title.
"Exactly. Politics is all theatre. Why even care? Look what it got the Greeks. It's probably worse here because we are closer to the shitheads in charge."
All governments are only allowed to operate within parameters defined by the central bankers. Can anyone argue that statement at this point? Now we have to start thinking about what this really means; and what, if anything, we can do about it.
I'm voting for Scrooge McDuck.
Here ask her to print and pay off the PR bonds. It's so fun everyone will want to do it!
http://www.zerohedge.com/news/2015-07-16/tennessee-woman-arrested-printing-money-all-these-other-bitches-get-print-money-so-i
Another worthless, horseshit article blaming the left for some country's ills. Wasn't it the model of free market, deregulated capitalism that brought the world economic situation to the brink of disaster in 2008? I didn't see nitwits like this blame capitalism. Zero edge?
The only thing keeping the U.S. and the U.K. from blowing up like Greece or Puerto Rico is printing money. Trillions of it. And they have it all right?
I defy you to explain how deregulation had anything to do with PR's current situation. Blame Capitalism all you want. If there was anything like Capitalism left in this country PR would default and the bond holders would get the shaft full in the face. But just wait until we start getting the bleeding heart stories of all the poor pensioners and others living purely off government largesse who would surely starve to death if "somebody doesn't do something". And in will ride Captain Oingo-Boingo from the White House with a rescue package financed by you and me.
Where, and how did you ever read that from what I said? Are you drinking?
Yes. But I closed one eye and I could still read that you were blaming Capitalism/deregulation so I went with it.
Sigh...keep drinking, I guess. It can't hurt. But it sure isn't helping.
Fuck it Im Drinkin too!
Fascism is the merger of state and corporate powers that is a socialist wet dream. Subsidize it all with a printing press....no markets
RIPS
You might need rehab, because that made no sense at all. You can Google ''an AA meeting near me'' and you've taken the first step to recvovery.
Collectivism/socialism/communism make no sense either. But you chumps keep drinking the Kool-Aide so we must continue hitting the sauce. Until it is time for a stand up fight, that is.
http://www.econlib.org/library/Enc/Fascism.html
Communism is the goal of socialism. lenin
Stop forcing other people to do.
RIPS
I am drinking.....
I've one-eyed it twice and I still can't see the hot puerto rican chick after I click on the article.
Can you?
Maybe you need a five to twelve step program to get you past your delusions ;-)
Bob, probably half the people on the board at this hour are drinking (or other). It doesn't mean they all got stupid, just a little more mellow. It's why I'm being very polite. I didn't down-vote you and I didn't even use the F-word once.
I'm drinking too, but it didn't make me see things that aren't there. There's drinking, then there's problem drinking.
You used the two words literally back-to-back in the second sentance of your post. I'm fairly sure I didn't hallucinate that.
What you did hallucinate was where I blamed dereguation for what happened in PR.
OK. You win. I have no idea what your point was then.
Exactly. That's what I've been trying to tell you.
(pssst)
(he's implying that you had/have no point ...)
Peter Schiff lays out the case very well. I don't think it is horseshit, I think your brain must be horseshit.
That was deep. No, really, run with it. That was all you, wasn't it?
Hey fuzz nutz - we haven't had 'free market, deregulated capitalism' in this country for well over a century. its not about blaming the 'left' - dont get me wrong, they are a HUGE problem, but its the government; the marriage of banks and the state and the federal reserve intertwined to some fucked up leviathan beast that sucks the life and liberty out of this country. Stop watching MSNBC.
So the real problem is Fascism, which puts more power in the hands of the rich, big corporations and banks, which is aligned with the left...how?
You are that naive, huh? Look up your leftist friends like ummmm any of the Clintons and Obama to start. You look at the donations and tell me that the hands of the 'rich, big corporations and banks' are not donating to them. Please dig that up for me, I beg you. Just yesterday Hillary blasted short-term trading hedge funds - yet next week she has a fundraiser with Chopper Trading in Chicago - one of the biggest short-term/high frequency trading shops on the planet. You don't think Obama is in deep with every fucking health insurance company with the roll-out of Obamacare??? Open your eyes - don't be blinded by the truth - even though it does hurt.
So they're lefties, but suck up to the rich, the banks and corporate interests so, which means they're owned by them, and will do their dirty work at the expense of the rest of us but...they're still lefties? And you think I'm naive?
You see me defending the 'right'?? I told you in my first response it is THE GOVERNMENT...left vs right parade is just that - a side show. They are one in the same, maybe you get a diamond in the rough like a Ron Paul or a dozen diamonds in the rough like the founding fathers - and before you mention slaves and their wooden teeth, youd have an English accent and would be a 'subject' to the royal crown if it wasnt for those 'righties' . But then again, I guess they failed too since we are subjects to every ABC agency out there by prison or death should we insult Caitlyn Jenner or not pay our 'fair share'.....
Anytime you argue with closet leftists like this bobnoxious arsehole you go round and round with this definition of socialism. People like him will always piss in the pool and never admit it. So let me make it crystal clear: using the power of the government gun to TAKE MONEY from one person and GIVE MONEY to another is and will always be IMMORAL and leads to SOCIETAL DECAY! This applies to individuals as well as corporations. Get it bobnoxious arsehole?
Are Jews to the "left"?
I guess it depends on which country they're driving in.
For over a century? So what the fuck do you mourn, a wet-dream, capitalist utopia? Perhaps you could provide a current example.
Probably but Mike Obama clearly still has the dick swinging low.
You urgently need to come out of the closet, Falconsixone.
hell with these "jonez act thingies" I'd like to see more babez!
Where is Robo-Trader, anyway? There he was predicting the exact stock market trajectory that has happened, and bidding on NFLX etc.
- Ned
Gold bugs ran him out, which is too bad because he was one of the few people (along with slaughterer etc.) who had good market commentary. bofa had a pretty big beat, zh response? crickets.
I wanted to see more of Miss PR!
She's probably a foreign import. Most good looking women will have the ability to flee.
Fucking shocking-... we need.More democrats....Im beginnning to relate with the Messiah as he enterned the temple and got a wee bit pissed at the money changers...FUCK I hate this life. Cant even enjoy life, grandkids, children, etc as everyone jockeys for money....
JUST WRITE IT OFF OPPENHEIMER!
Rico laws should be enforced here
I think it's funny they got the 70 billion actually.
Puerto Rico Laws?
THE MINUTE some entity somewhere, be it a fund, government, company, stock or whatever, goes incontrovertibly and openly BANKRUPT for all to see, the game is up.
TPTB know that, which is why the desperation to hide insolvency, to extend-and-pretend, to paper over and to print, print, print...
Who authored this piece of shit? It’s not what societies do for its people, it is what criminal central bankster fascist do to country! Plunge that up your butt! Fascist!
There is no limit to the good men with guns and the law behind them (government) can do for people.
"Everything free in A-mer-i-ca. OK by me in A-mer-i-ca."
Can't remember the rest.
It stands to reason that the US Government will step in and add all debts to American taxpayers balance sheet. This is the first step in any debt crisis.
The U.S. has bombed the territory of Puerto Rico with five supposedly well-meaning, but economically devastating policies. It has:
Yes, if you untax something you increase demand. By untaxing debt, it allowed debt to then create new credit. This can create a boom for a period, then later the credit reaper wants to harvest real assets. It is the age old game of growing debts to then harvest in a magick swap.
So, what is the line of causality? Was it the government that purposefully did this, or was it bond markets and money power that shilled for and coerced government? Was government law overturned by predators greasing politician’s pockets? Does the American system require politicians to have money in order to run for office?
If you untax something you create demand by making the object cheaper. Private sector can borrow money into existence in order to buy up industry. Often in the course of borrowing new credit to then buy out industry, the green mail raider will also take pensions and put it on the credit books. This is a rent scheme.
Restrictive trade means that exports cannot go up in order to grab money, to then pay the debts.
This is false logic. The minimum wage in a real economy is a way of returning rent losses due to the gap in capitalism. See gap theory as elucidated by Douglas. Schiff is wrong here. Labor should not be underpaid for their true value; capital should not get outsized reward. Capital reaping rewards is unbalanced and usurious.
And what is the gap between potential productivity and actual productivity? The CBO in the U.S. notes that the country’s output is 1T per year below its potential. If money as demand points properly, so people can work, then their output becomes tremendous. An economy can easily support welfare benefits, as income goes up. The Old, infirm, and the stupid can be idled. A real economy does not need everybody to work. Machines and energy are doing a lot of the production now. The 1T gap is a large number, and it is actually higher than that due to inefficiencies induced by a false private credit “as money” system.
Labor that is can work and refuses to, is another story – and rewarding that is a form of rents on the productive.
Ironically, Schiff shills for floating money issued privately, not seeing that credit privateers are attempting to take rents by claiming the commons as their own.
Government constrained to its role is a necessary evil. Government’s role is inelastic markets. Government also needs to tax away rents, to thus make the economy rent-free, and hence economically low friction and efficient.
This mantra that “government bad” is actually hypnotic suggestion that destroys argument at its source; what is the true role of government and its ability to restrain predators? And yes, there are predators in government as well as in the private sphere.
Check your numbering. Otherwise good info.
Absolutely correct. From experience. My Sister is coming in from PR and she wants to live with us. But first thing I have to do is take her to H&HS and get her signed in.
They come with their own base cash ripped from that island and steal more from this one!!!! WTF!!! Then most don't want to work and glean off the relatives for mental disabilities, disabilities from car accidents or stumbling down a staircase. And who's paying for all this shit. You and me bro! So we can keep a top secret sub base in PR.
WAKE THE FUCK UP PEOPLE!!!!
We are being RIPPED THE FUCK OFF!!!!
"Labor should not be underpaid for their true value"
There's how you spot a closet Marxist. They think there's some true value of labor that they are privy too but you're not. The market is unable to determine it as well, so their jackbooted thugs will have to.
https://en.wikipedia.org/wiki/Criticisms_of_the_labour_theory_of_value
I am too lazy to look for where you pulled the quote and respnd to them so I'm responding under your entry. Sorry to early in the AM.
If that is true then the inverse is true and LABOR should not be OVERPAID for its true value which would then call for the elimination of ANY WAGE LAWS such as the dreadful minimum wage.
So to the fascist moron who writes "...underpaid for its value..." you stepped in it and I'm afraid that your "more equal" comrades just might uninvite you from the next cocktail party to fund raise for the flavour of the month totalitarian looking for handouts to win some political office so he can tell the rest of us how to live our lives, what we can and cannot do with our bodies, property, and regulate our associations all through the mechanism of "democracy" facilitated by a heaping mound of self-righteous do-gooderism and, of course, backed by threat of violence, coercion, and guns.
Fuck yeah, Amerika!
And what of the senior management of failing/non-performing companies who are paid millions?
This is one of the most bizarre posts I've seen on ZH and it's totally full of sh*t. Was this written by the Marxist comittee of the SEIU? What the hell is "Gap" theory? Never heard of it Not to mention the use of English as a fifth language.
some fine fascist crony crapitalist loaned them the "money" in the first place so whatever
Fix the phony baloney credit money system:
Actually it should be shit canned. What is going on with Puerto Rico, and Greece, was also done to Weimar Germany, and done to South America, and done to Africa, etc.
Tax rents and unearned income.
Stop using debt based money.
Never let your debts point outside of your law.
All international trade is only barter.
Never let money trade for money.
All of this Schiff noiise is just grousing about symptoms of a false money system. Government is in a subordinate role already to money power.
Political affiliation has nothing at all to do with anything, both NeoConservatives and NeoLiberals are dialectics of money power. Libertariansim is worshiping markets, as if markets are God and somehow magically balance themselves. When in reality markets are man made creations, and further there are three kinds of markets and each should be approached differently.
Captialism can only distrubute money as prices. Labor makes goods and services, and then it goes out as prices to grab money. Money if it is NOT AVAILABLE in the money supply cannot be grabbed.
If the money has vectored away from its debt instrument that is FRAUD. If the Debt has grown outside of nature and consequently, the money does not mirror, THAT IS FRAUD.
Deregulation action freed up rentiers to take unearned income. They are currently in harvest phase taking what is needed for an economy to run at full capacity. By taking the commons and then tolling them, it causes economiic losses and overhead.
Give me a fucking break with this "socialism destroyed PR" bullshit. Lending is overwhelmingly a capitalist function and when the loans are obvioulsy not going to be paid back, but are loaned anyhow to make money bundling derivatives, that is pure capitalism. Unadulterated.
People will take free-ish money if you offer it to them in both capitalism and socialism, so the author of the article is wrong to correlate PR's overzelous debt issuance with socialism.
Correct. The banks and corporates own the State and change the rules to suit their needs. Can't be socialism if the institutions of the state are being used to benefit corporations, the banks and the one per cent. More like nascent fascism.
Insightful Post, Corporate Socialism didn't seem to be addressed in the article. Then as you point out the Financing is behind everything and benefits the Capitalist.
Nothign. Nascent. About it.
"Lending is overwhelmingly a capitalist function" - Incorrect
"Lending capital is overwhelmingly a capitalist function" - This is correct.
"Lending" currency printed out of thin air - This is counterfeiting, fraud and definitely not capitalism.
You are obviously an idiot. Socialist always act as the parasite on the host of capitalism. Politicians always use the capitalist system to finance their socialist objectives all while blaming capitalism. True capitalism would mean a free market unencumbered by idiot socialist redistributive policies. Once the political hack has successfully tipped the scale to where their policies begin the erosion of incentive, capitalim leaves and the political class blames free enterprise. People are rational. Once the climate to run a successful profitable business has disappeared, then so do businesses and all you have left is gubt workers and the welfare class borrowing and taxing the ones left behind to the point of collapse. See Chicago. True capitalism combined with the incentives in place in PR would have made it a vibrant economy with people working. But using the tax advantages to purchase votes via welfare and union gubt jobs has killed the golden goose. When money is spent to produce nothing, as soon as it is spent it will seek out its most efficient level of utilization. So it leaves to somewhere it can appreciate. It never cycles back into the economy unless it is in the form of high interest debt. Socialism is communism and communism kills everything in its path. Especially the human spirit to create. So. Fuck you.
PRs have been US citizens since 1917. They started the ruination of NYC. But yeah blame it on socialism, bad as the system is you could have capitalism or whatever and it would still be PR just like Liberia is LIBERIA and Mexico is Mexico and Zimbabwe is Zimbabwe.
where did the chick pic go, screw this thread
Cheap financing corrupts. Government tax exemptions corrupt. Falling interest rates corrupt. Everything from government corrupts. Corruption is additive. The piper is always paid.
Middle class was destroyed in last ten yrs
Now these two classes
No I between
The rest is history
So now we're supposed to believe some horseshit story about how it was socialism and not banker bailouts at the expense of the little guy?
It is ZH style sheet to blame all economic problems on either Socialism or Keynesianism. Capitalism is never at fault, despite the fact it is Capitalists who issue debt money to Puerto Rico, Greece, etc. Nobody forced them to loan money to these places. If they did due diligence, they would have known these investments were worthless. It's an entirely Capitalist failure, not a Socialist failure.
Who let the troll in?This isn't capitalism, since you're askin'.
"it is Capitalists who issue debt money to Puerto Rico, Greece, etc. " - A person who lends capital is a capitalist. A person who prints currency out of thin air and pretends to "lend" it is a criminal engaged in fraud. That person is permitted to commit that fraud because it has been made legal for him to do so by the lawmakers. That is the definition of fascism.
How Capitalism Destroyed Puerto Rico, and why more Defaults are Looming
Fixed that headline for you.
Like the old Soviet Union. Running out of other people's money.
Socialism? that would mean that workers control the means of production and i haven't seen it in puerto rico.
What you describe is really Communism.
Socialism is best seen as "communism-lite". Nowdays it's closer to corporatism, which does indeed include political control over the means of production but not necessarily ownership of it. The differences between Stalin and Mussolini were examples of this.
To all the people arguing over whether this is socialisms fault or capatalisms fault or fascisms. I would venture to say you all are missing the bigger picture. True, many "lefties" use populist lingo and hide under a socialist banner, while many consider the fascistic nature or our mega corporations to be purely the offspring of the "right" wing. Capitalism is a way of organinzing an economy mainly by letting people direct the economy on their own. The opposite end of that spectrum is a command and control economy aka the soviet union. Each has its fault. Our "FREE ENTERPRISE SYSTEM" of today hardly resembles true capitalism. We are more of a hybrid system.
But whether its fascism or sociaism is irrelevant, and it has traits of both. the main problem is that fascism (totalitarian govt and big business married) or socialism (totalitarian govt that has nationalized all business) are both totalitarian. All the ism's in the world all have a totalitarian control aspect to them. At the other end of the spectrum is anarchy. Arguiing about which ism it is tha caused PR's problems is pointless.
"I know, Lord, that our lives are not our own.
We are not able to plan our own course.
So correct me, Lord, but please be gentle.
Do not correct me in anger, for I would die.
Pour out your wrath on the nations that refuse to acknowledge you—
on the peoples that do not call upon your name." - Jeremiah 10:23-25
Capitalism is a way of organinzing an economy mainly by letting a tiny, powerful, well-conected, elite (tiny) minority direct the economy on their own which inevitably leads to the lesser being well and truly shit on.
Capitalism, not socialism.
Have you ever experienced real capitalism? What you are experincing and have for your whole life is CRONY Capitalism aka Fascism Lite™. We are in the full capture mode now where Big Government and Big Business are colluding to eliminate competition in both the political and economic spheres.
Who gives a flying fuck... evil has many names.
Tyler: "How Socialism Destroyed Puerto Rico"
This is no surprise. Socialism is all about destruction but it fools people by wrapping itself in fancy labels: "progressive" "fairness" "justice" "equality" and the like. But of course none of these are ever applied to itself. When it crashes any society hosting it - which it always does, it simply re-invents itself, does some fancy footwork and carries on. New labels, new phraseology, new lies, new deceptions and new madness. Many people can't see through the shallow façade.
One of its greatest mistakes is to attempt to impose its preferred paradigm onto society. When society doesn't respond, out come the anti-liberty, hate speech, affirmative action and other assorted mad laws enforced by their religious followers. Eventually they bring out the jackboots to enforce obedience and impoverishment.
Rinse and repeat using a new host.
And the Socialst Latin countries all have their distraction politics: Maduro has his claim to most of Guyana solely based on uti possidetis juris (inheritance from Spain); and Argentina has its mythical Malvinas claims.
Uti Possidetis Juris - debunked:https://www.academia.edu/10573590/Falklands_-_Uti_Possidetis_Juris_and_N...
Malvinas Cliam - debunked:https://www.academia.edu/10490336/Argentinas_Illegitimate_Sovereignty_Cl...
This was a propaganda piece.
Peter Schiff moved to Puerto Rico, extolling its government's goals to rape the US mainland of tax dollars. Now he wants it to declare bankruptcy so he can keep his tax advantages?
Puerto Rico doesn't have a monetary problem, it has both a fiscal and societal problem of not living within its means. And Schiff, who parasitically moves his business there, is part of the problem.
Schiff is just gaming the system to his advantage
Once the gun of the state is pointed at your head, all decisions you make from this point forward are devoid of moral connotations
I don't blame the Free Shit Army, the parasite corporations, the corrupt politician... I blame the system
Schiff holds himself up as a gold investing moralist.
While you are entitled to hold a game-the-system point of view, assigning it to Schiff is nonsense.
Are you all having "fun" argueing amongst yourselves ?
left . . .right . . . left . . . right . . .
you wake up to the fact that you've got a chain when you realise that someone is pulling your chain.
PR is kind of like Greece where they are taken advantage of on all sides. Both by bankers and PR by US corporations. So lets implement austerity, which we have seen is the dumbest thing you can do. But yeah sell PR to individuals who wont reinvest and do not create economic growth and when there is a crisis or corporations go elswhere for cheaper labor there will be nothing left (NAFTA). PRs problems can be credited to its colony status of not being able to apply for bankrupcy like municipalities inland, high-stakes game of hedge-fund casino gambling, with about 43 percent of the debt held by so-called vulture funds and Wall Street banks and lawyers charging over $1.4 billion in a seven-year period between 2006 and 2013 for charges like swap termination fees. The construction and infrastructure building boom that was partly financed by bond-selling had burst sending the economy in a death spiral. Capitalism/globalization/banking is there when large profits are to be had but once shit goes wrong its all a blame game on the poor like usual.
PR is kind of like Greece where they are taken advantage of on all sides. Both by bankers and PR by US corporations. So lets implement austerity, which we have seen is the dumbest thing you can do. But yeah sell PR to individuals who wont reinvest and do not create economic growth and when there is a crisis or corporations go elswhere for cheaper labor there will be nothing left (NAFTA). PRs problems can be credited to its colony status of not being able to apply for bankrupcy like municipalities inland, high-stakes game of hedge-fund casino gambling, with about 43 percent of the debt held by so-called vulture funds and Wall Street banks and lawyers charging over $1.4 billion in a seven-year period between 2006 and 2013 for charges like swap termination fees. The construction and infrastructure building boom that was partly financed by bond-selling had burst sending the economy in a death spiral. Capitalism/globalization/banking is there when large profits are to be had but once shit goes wrong its all a blame game on the poor like usual.