We should make the car companies that took our tax payer bailout money and pay it forward to PR.

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Take a short break from ST and read my blog:
http://tri-banter.blogspot.com/

Except that, as I understand it, what's being proposed is not a bail out, as it involves no transfer of federal monies. Rather, it's removing restrictions that prohibit PR from having any leverage in restricting its debt.

Not excusing them in total, but this isn't all their fault.

https://www.youtube.com/watch?v=Tt-mpuR_QHQ

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Slowguy

(insert pithy phrase here...)

If these guys would pay as much attention to their finances as they do their cars we wouldn't have this problem.

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"I really wish you would post more often. You always have some good stuff to say. I copied it below just in case someone missed it." BarryP to Chainpin on 10/21/06

If what you mean is participate in US bankruptcy courts, you would be correct. But since their citizen do not pay into our federal system as we do, I do not think such protections should exist. Even then, the bailout would call for extraordinary bankruptcy proceedings much like the Detroit bailouts, favoring constituencies over rule of law.

It has been a long time since I did bankruptcy accounting or read the various laws, but secured creditors are favored, then unsecured creditors, etc. Obviously this would be different and fall under municipal bankruptcy for which I'm unfamiliar with creditor priority if different. The Detroit bailouts saw a change in the game to satisfy traditional democratic party constituencies such as labor and unions. These same people are crying foul in the PR bailout as currently negotiated. Saying pensions and etc need to be prioritized over creditors. That is the congressional politics. Democrats supporting the poor and downtrodden, republicans supporting US business interest. My argument is they are not a US municipality, they should not get any US standard protections and they should be held accountable for their fiscal mismanagement that was largely driven by democratic like politicians buying votes with social welfare promises.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

Don't watch videos while at work. Does this have anything to do with the congressional stalemate?

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

Not to play into any stereotypes, but the neighborhood I lived in Florida, was largely Puerto Rican. My wife being the neat freak she is used to try and shame me into washing my care frequently. Saying look how much pride Orlando (our neighbor), Roberto, and Vinnie take in their cars. They wash them every week. I said so what what. I work more than 60 hours a week and got important crap to do on weekends.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

No, it has to do with some of the legal peculiarities that pertain to Puerto Rico that made it such an attractive location for some predatory business practices, and other things that have helped get them in this position, including the fact that they legally can't file for bankruptcy.

By the way, I don't think bailout is an accurate term. My understanding is that the debate in Congress is over debt restructuring without any cash infusions, but I'm not totally up to speed on that.

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Slowguy

(insert pithy phrase here...)

Here is an article about the stalemate and some of the issue that prevent it. Looks like everybody is a little right.

1. They don't have access to US Bankruptcy protections and want it. A key provision to restructuring debt.
2. A bill that would help with this, comes with strings attached. This goes without saying. Corporations, even cities who go into bankruptcy have judicial oversight on their spending. All major expenditures reviewed and approved. You can't file bankruptcy and send your executive staff to france for a company picnic. Towns cannot arbitrarily double key personnel's salaries, etc. However, due to the scope of this, a panel would provide additional oversight. PR doesn't want that. Puerto Rican officials are wary that granting too much power to the fiscal oversight board at the center of legislation drafted by House Natural Resources Committee Chairman Rob BishopRob BishopAn unconstitutional oversight board for Puerto Rico?Pelosi’s Puerto Rico dilemmaOvernight Finance: Puerto Rico defaults on 2MMORE (R-Utah) would steal from the territory’s autonomy. García Padilla pushed back hard against a powerful board in his remarks Sunday, arguing it should not be designed to overrule the decisions of the island’s elected officials. I think the fact that they are in this mess shows elected officials need oversight. They want the protections US laws and courts provide, but want to remain autonomous. Funny how that works.
3. Labor and pensions prioritized over creditors. This is a non-starter. As mentioned before. Bankruptcy is a legitimate way to restructure debt, its legitimacy is based on consistent rules that favor the people taking the most risk, creditors. To move labor and pensions to the front of the line shocks the system, meaning any future debt issuances, or restructures would have a lower credit rating which translates to a higher cost of capital, which is a downward spiral. I said when Chryslers debt was restructured favoring labor that that set a dangerous precedent. If you as a creditor are not reassured the banks will favor you in bankruptcy, you simply will not loan to higher credit risk going forward. That would make restructure under better terms impossible. Unlike mortgages, which our gov't mandates high credit risk people have access to (creating a whole host of other problems), private individuals and entities need not loan money to gov't. An entity like PR can only raise capital by taxes or debt. The cost of debt is beyond the control of any entity, no matter what they would have you believe. Being a welfare state, they seem dependent on a small pool of taxpayers and debt issuances to sustain themselves. PR can issue 0% interest debt on 1 billion tomorrow, if the market doesn't think it can recover that because their elected officials are irresponsible or bankruptcy courts do not follow normal rules, they won't get 1 billion dollars from the market. They may only get 850 million on debt with a 1 year maturity. That is called market implied interest and cannot be regulated or controlled by gov't forces. This is why I love studying debt markets, they tell you more about a country or entity than anything else.

I don't see this as much of a partisan battle as much as both sides of the aisle agreeing that there are certain provisions necessary for which the beggar (PR) doesn't seem to agree with. They could pass a bill tomorrow if normal bankruptcy rules followed and proper judicial/bankruptcy oversight consistent with any other large scale municipal or corporate bankruptcy were followed.

http://www.thehill.com/...-puerto-rico-problem

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

PR is certainly not without fault here, but they have also gotten screwed because of how the laws work for PR vs a State (or most other US territories).


Just to be clear, PR absolutely pays into the federal system. The citizens don't pay individual income tax, but they pay almost every other federal tax. PR contributed something close to $4 billion in federal taxes in 2009 (latest year I could easily find).

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Slowguy

(insert pithy phrase here...)

Right. I should be clearer. They pay social security and medicare. They do not pay individual income taxes. That was the measure I was using. I also assume corporation do not either.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

Here is a summary that is consistent with political discussions I had while working in PR a couple times and other things. This is also why they do not want oversight of their spending. Too much dependence on gov't in terms of jobs and welfare could create a political crisis for its liberal gov't.

http://townhall.com/...down-a-hole-n2157599

This article somewhat covers how the "Special form of bankruptcy PR and democrats wants would limit future access to capital".

http://townhall.com/...o-hong-kong-n2157761

Yes, these may be biased, but they are pretty factual based on my knowledge of bankruptcy and the political climate of PR.

Just to tell you how effed up PR is, I caught a manager stealing at least 40K from a property. This is money we traced to a personal account of a family member by masking refunds to celebrities in the top level system. The evidence was rock solid, we had a confession as well. The prosecutor refused to prosecute because he said juries tend to favor employees over companies, especially companies not domestic to PR.

Its now wonder that island is effed.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

Labor and pensions prioritized over creditors. This is a non-starter.

Why is this a non starter when we already did this for GM and Chrysler?

~Matt

Correction, should be a nonstarter. See the president already created by that.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

Correction, should be a nonstarter. See the president already created by that.

Which is my point.

Why would we say no to PR when we already did it for GM and Chrysler. If GM is to big to fail wouldn't PR be as well? Pensions will be covered, Labor will get a raise and creditors will get the shaft.

~Matt