Per the backlink, Puerco Chico (Puerto Rico) is going to default and, wonder of wonders, the congress is not only going to change the laws to enable it but they will fast track it. Oh sure, they say it will be a difficult battle blah blah blah but really, what other choice does it have? I love it when they say that someone cannot default "by law". If you don't have the money to pay then you don't pay. Period. Call it what you want. And if you just say "well, your debt grows by 5% each year you don't pay" then the debt will just go exponential due to the interest alone because compound interest on a debt that is not being paid down is an exponential function. If they can't pay 70bn then they won't be able to pay an even higher amount.
Sure, you can turn Puerco Grande into little Cuba and have poverty all over the place but then the people begin to talk about taking down the government. You think PR's best producers are going to want to look at the rest of the states doing reasonably well while they are controlled under Greek style austerity??? BULLSHIT!! The best and brightest WILL JUST LEAVE. PR residents are US citizens and so they will escape that liberal Hell hole to the states for better lives and then for each productive member that leaves there will be one less Mark or Patsy to continue getting their wealth transferred to someone who has little economic value add (i.e. lower class citizens and government bureaucrats who keep promising them free shit).
Now hear this educated people of PR: your time to flee your island wonderland grows short indeed. The first few to leave will get out but if there is a mass exodus of brain drain then someone is going to change the laws in order to force you to stay in that socialistic shithole that YOU created so that YOU though your future labor can work off the debt that YOU allowed to be racked up in your name whether or not you got any benefit from it. I'm telling you fools, back your freaking bags and make for the US mainland. Leverage your Spanish speaking skills in SoCal or some other place but get out of PR before they put up a legal fence to keep the slaves in.
You have been warned.
In order, Detroit and Illinois are more marginal than Puerto Rico. The former has been on track to become the first ruins of the American empire long ago. The latter has been defaulting left and right for years, even on lottery prizes won by low class citizens in the only legal gambling available (and owned by the state).
ReplyDeleteBTW, this is debt rolled over by Puerto Rico a couple of years ago. The original lenders, the big banks, got whole; the new lenders, state pension funds seeking yield are years of financial oppression by the Fed, got hosed. Any resemblance with Greece, even down to the original lenders, is not mere coincidence, as the consequences will not be either.
Well said. A city is marginal compared to a US territory which is marginal compared to a state (even if that state being compared to is the birthplace of modern organized crime known as Illin' Noise). States are of course marginal to sovereigns. This is why there is real risk that when sovereigns begin telling their best states to take one for the gipper, that the states rebel and want to be sovereigns in their own right.
ReplyDeleteJust like Catalonia is doing over in Spain right now.
http://www.theatlantic.com/international/archive/2015/09/spain-catalonia-catalan-independence-vote/407752/
If a civil war breaks out in Spain over secession, you will know in advance who to blame and that is bankers and moneymen and their damned Mammon money scheme.