Category: Aggregated

“The Puerto Rican crisis is real, and no one can seriously argue otherwise. We’ve done everything possible to keep the country afloat and not shut down the government,” said Puerto Rican Gov. Alejandro García Padilla during a visit to Washington last week. But, “we’re out of cash, and there are no more fiscal gymnastics we can perform.” It’s very likely, he said, that his government will not be able to pay the $1 billion debt payment that comes due Jan. 1.

Vulture funds, which hold between one-third and one-half of the island’s $72 billion in debt, are squeezing U.S. Congressmen and Senators, not to pass legislation which would provide Puerto Rico some relief through Chapter 9 bankruptcy protection, through which it could restructure its debt.

Instead, last week, Sen. Orrin Hatch (R-UT), Chuck Grassley (R-IA), and Lisa Murkowski (R-AK), cosponsored the Puerto Rico Assistance Act (S.2381), includes no legal framework for restructuring, offering $3 billion in “new” liquidity which won’t go far. Worse, it would create a federally-appointed financial control board to oversee every aspect of the island’s finances, arguing that the “corrupt” Puerto Ricans created this problem for themselves, and will now have to own up. It also suggests that pension “benefit reductions” may be necessary, USA Today reported Dec. 10. Puerto Rico’s impoverished population cannot withstand further austerity. The poverty rate stands at 45%, and 1,500 people leave the island every day for the U.S. mainland.

A Dec. 11 Mother Jones article quotes former New York State Assemblyman Nelson Denis, who warns that the control board would have the power to make all of Puerto Rico’s financial decisions, conduct its own investigations, subpoena witnesses, file administrative or criminal charges against island officials who don’t comply and take out loans for which island taxpayers, not the federal government, would be liable. This, he said, would be “a dictatorship in the Caribbean, created in Washington, operated from Wall Street, all disguised as a `management assistance authority.'”

An article to be published in the winter edition of American Prospect magazine, documents in great detail the extent of the looting, predatory lending and demands for blood practiced by the murderous vulture funds which hold, according to some estimates, anywhere from a third to a half of Puerto Rico’s $72 billion in debt. Not surprisingly, the same vultures that prey on Puerto Rico, such as Aurelius Capital Management, whose founder Mark Brodsky is appropriately named “The Terminator,” have also bought up the debt of Detroit, Argentina and Greece.

Author David Dayen explains that some years ago, as hundreds of U.S. corporations left the island because they lost their tax-exempt status, unleashing a deep economic crisis, Puerto Rico tried to deal with the crisis by issuing more debt. The vulture funds egged them on, since municipal bonds are free from federal, state and local taxes. Public debt has increased every year since 2000, when the debt stood at $25 billion. Once credit rating agencies began to downgrade Puerto Rico’s debt in December 2012, the vultures moved in rapaciously, buying up debt on the secondary market at pennies on the dollar, and then demanding repayment of the bonds’ full dollar value.

Today, these predators have become the only “investors” willing to lend to Puerto Rico, making up almost all of the participants in the 2014 sale of $3.5 billion in low-rated, 8.7% General Obligation Bonds (on which there is a constitutional guarantee of repayment)—the biggest U.S. municipal junk bond sale in history. They were willing to lend even more this past summer, even after Governor García Padilla warned on June 1 that the island’s debt was “unpayable.” Vultures such as DoubleLine Capital and Avenue Capital were still buying up discounted debt as recently as November.

Jeffrey Gundlach of DoubleLine has called Puerto Rican debt “his best idea” for investors. One group of vultures succeeded in overturning a Puerto Rican law that would have allowed public corporations to restructure their debt, hiring Bush League thug lawyer Ted Olson to argue the case.

Russia chief of the general staff, Gen. Valeriy Gerasimov delivered a lengthy report on the Russian military to defense attachés in Moscow, yesterday morning.
He said at the outset:

With the deployment of ballistic missile defense and the development of new weapons war, he said, “the problem of imbalance of strategic forces is getting worse.”

Other threats include color revolutions (he didn’t use the term but his description clearly shows that’s what he was talking about) to overthrow governments, proliferation of weapons of mass destruction; cross-border crimes and narco-trafficking; separatism; and uncontrolled migration and xenophobia. He said:

With respect to Syria, Russia is forging relationships with many countries concerning that conflict.  Gerasimov said”

Much of the rest of the report was devoted to the modernization efforts of the Russian military, in the realms of manpower, training and equipment which are quite extensive. Most significant was the stress that Gerasimov placed on the modernization of Russia’s nuclear deterrent, which, he said, will be developed “to maintain the strategic offensive and strategic defensive forces at a level, which would provide assured deterrence against aggression towards the Russian Federation and its allies.” Other areas that Gerasimov reported on where progress in re-equipping the military services towards the 70% goal of modern equipment by 2020, and the professionalization of the manpower of the services.