"What Are We Going To Do?" Puerto Rico In Chaos As Cash Runs Out

Most Puerto Ricans haven’t had access to electricity, cell service or financial services for nearly two weeks now. And as we reported yesterday, residents who didn’t stockpile enough cash have been struggling after Hurricane Maria essentially knocked the island’s economy into the 1950s, forcing some to forgo essential supplies - or worse - resort to looting. For those who do have access to working ATMs and banks, long lines have sapped cash reserves as the country has effectively reverted to a "cash only" economy.

Those whose access to cash has been limited - or cut off entirely - are becoming desperate as they start to wonder how they will begin the process of rebuilding their trashed homes - or even where their next meal will come from. As Reuters reports, cash has become just one of many scarce resources on the island (food, medical supplies and gas are also in incredibly short supply).

With electricity and internet down in Yauco, southwestern Puerto Rico, Nancy and Caesar Nieve said they could not access paychecks directly deposited into their bank accounts.

“What are we going to do when we don’t have any cash? The little cash we have, we have to save for gas,” said Nancy.

Cash demand spiked in the first few days after the hurricane as merchants were unable to accept other modes of payment. First BanCorp, one of the island’s largest banks, said that nearly two-thirds of its 48 branches remained closed, and that electronic transactions had resumed at only 25% of its ATMs.

Apparently, word of these privations made its way back to the New York Fed, which has assured the world via the Wall Street Journal that the central bank has plenty of physical cash to keep banks on the island stocked for the forseeable future - lowering the likelihood that anybody will suffer for lack of access to cash. Notably, the WSJ didn't explain where that money was being held, how long supplies are expected to last or how it got there in the first place.  Indeed, the central bank said only that it's "prepared to meet elevated currency demand following the natural disaster." Reuters noted that the central bank ships cash to a depot on the island, and that before the storm it increased the size of its shipments.

As WSJ explains, Puerto Rico is in the New York Fed’s district despite its location in the Caribbean. In times of economic stress or a natural disaster, Fed regional banks plan ahead to make sure area banks have enough cash.

Of course, none of this matters if you can't get to a bank or an ATM. But at least, if they somehow manage to find an open bank branch or working ATM, Puerto Ricans can rest assured that it will be freshly stocked with cash.

But Puerto Ricans might want to hold off before thanking Bill Dudley for his foresight. It’s worth asking exactly how long the island’s cash inventories will last. After all, the storm tore up roads and leveled buildings, potentially complicating deliveries of cash. And with authorities still focusing on search-and-rescue missions and other aspects of the preliminary response, it could take for some areas of the island to return to some semblance of normalcy.  

Furthermore, looting has become increasingly common across the island, increasing the danger that deliveries of cash could be intercepted by bands of robbers.

In a statement, the New York Fed said armored-car services are able to reach banks with cash, and automated teller machines are “once again active.”

With any luck, the recovery effort will soon kick into high gear after President Donald Trump on Thursday suspended the Jones Act, which will allow more ships to assist in the international relief effort. It’s unclear why the administration hesitated to waive the law.

But is the Fed really doing all it can to alleviate the crisis in Puerto Rico? With the bankrupt island nation facing a $30 billion cleanup effort – and potentially more if it’s entire power grid needs to be upgraded – maybe the central bank could help monetize some of these expenditures.

Oh wait…
 

Comments

Antifaschistische Txpl9421 Thu, 09/28/2017 - 21:37 Permalink

note to self..When I build a country on a hurricane magnet island....1. make SURE every facility with a commercial kitchen is hardened enough to withstand 200 MPH winds.  (restaurants, schools, etc.)  It may be the only place to feed the masses when SHTF.2. If you going to hang everything on wires (like most 3rd world places)...make an investment in pole that will NOT blow down.  Put a wind mill on top of all of them to gen electricity during the normal times if you need to justify the extra investment.3. Encourage homeowners to have at least one hardened room in their house.  If they can't afford it...at least get a job box (knaack box) or something that will not float or blow away.  (keep 50 pounds of beans/rice in the knaack box. along with ammo, beer, etc.)

In reply to by Txpl9421

garcam123 Puerto Banus NA Thu, 09/28/2017 - 23:24 Permalink

I'm waiting for a call to go and help rebuild that wonderful island.  I've done several jobs there and they are wonderful warm giving people.Their women are world class fine, jealous as hell and know how to take care of a man and his house....some of the best surf in the world and really good weed!I'll be happy to see old friend and possibly help them rebuild.  I'm more of a manager than a worker and I get things done.  I'm hoping I can help!They are a tough resilient people, they will adapt to their old ways easily.  Their menues are about the same as they were 100 years ago.....one day it's chicken, on the hoof, rice and beans, the next day it's beans, rice and chicken.....you get the idea...... They also eat breadfruit and mangos and yucca and a wonde3rful mashed plantain with pork rinds and olive oil and garlic called mofongo!  And boy is it good!.....all mostly available at hand.  It'll be hard on old folks who need the A/C, but they will adapt.I loved Puerto Rico and the people there! They will come out of this I hope! They need to be air dropping dry rice and beans all over the island and ship in canned chicken and lots of Coors Light Beer! and get those refridgerators running again.....that was the coldest best beer on the planet.......2 tall boys at 10:00! God it saved my life many times!

In reply to by Puerto Banus NA

nmewn tmosley Thu, 09/28/2017 - 20:22 Permalink

I guess you mean, exchanged their BitShit for cash before the hurricane hit and......killed the power & internet.And then gave all their cash (or most of it) to diplomats or crony .gov-types for a flight out of the airport or trudged along the beach looking for a private captain who sailed over there to take them out and give most (or all) of their cash from BitShit to them.You have this unnerving habit of letting the obviousness of circumstances beyond your control cloud what is otherwise some pretty clear thinking T ;-)And no, thats not my downie.

In reply to by tmosley

garcam123 Endgame Napoleon Thu, 09/28/2017 - 23:31 Permalink

Actually they are going to get cleard away when that side of the volcano in the Canary Islands that's slipping into the ocean gives way......it's due to go any time....I can't remember what the rate of movement there is, but it's a few inches per year.....when it goes....the whole east coast and the Carribbean is tsunamied into hamburger.....likely for eternity!  My only worry going back. I just hope I'm sitting outside the lineup when it happens so maybe I can surf to Antartica on my way out!

In reply to by Endgame Napoleon

Never One Roach MasterControl Thu, 09/28/2017 - 18:47 Permalink

Years of corruption and zero oversight. Recently, (20 years or so) massive drug crime there. It's a no go for vacation anymore. I used to go all the time in the 1970's and 1980's no problems. Then drugs started flooding in in the 1990's and violent crime soared.On the bright side, the drug people in PR just rob you and maybe kill you outright, as opposed to the Mexican drug people who rob you and toture you to death chopping off your fingers and arms one by one ... and then boiling you in acid.

In reply to by MasterControl

garcam123 Never One Roach Thu, 09/28/2017 - 23:45 Permalink

You have no idea what you are talking about........every place has drug problems.  I never ever felt threatened in Puerto Rico and I had 25 local laborers working for me every day in a riverbed.  They all wanted me to pay them in cash so they could draw unemployment, just like in the good old ScrewSA!But they worked their asses off. I was trying to post a pic, but can't figure it out.........Anyway, if you're a mark.....you're a mark everywhere! 

In reply to by Never One Roach