Vulture funds demand brutal austerity measures from bankrupt Puerto Rico

‘A group of hedge funds that hold a large proportion of Puerto Rico’s debt have demanded that its government fires teachers, collects more taxes and reforms labor laws, as the US territory contemplates default.

The demand was stated in a report written by three economists with strong links to the International Monetary Fund and was commissioned by the Ad Hoc Group of Puerto Rico, which comprises 34 hedge funds. The financial organizations specialize in buying “distressed debt” – finances owed by borrowers who have no capacity to pay – for pennies on the dollar, and then attempting to extract at least some of the money. Known by the derogatory monicker “vulture funds,” many of the 34 funds were involved in prominent bankruptcies during the 2008 financial crisis, and previous national defaults.

Together they are owed $5.2 billion in bonds issued by the Caribbean island, which belongs to the US, but is not considered a part of it. Last month, Alejandro Garcia Padilla said the island’s $72 billion overall debt was “unpayable.”’

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