The Democrats' Plan For Nationwide Municipal Bond Bankruptcy

Commentary 

Richard Lawless


Rahm Emmanuel once said never let a crisis go to waste. The Democratic
Party has fully embraced that concept. They now see a possible solution
for gross fiscal mismanagement and political corruption.

Cities like Chicago or Compton, and states like California, have been buying
votes for decades by promising health benefits, pay raises and pension increa-
ses that could not be supported by the current tax structures. The thinking was
simple: give our supporters what they want and let the next guy figure out how
to deliver on our promises.

Well, the future is now. Chicago is ready to collapse as are over a dozen other
Democratic strongholds.  The voters will not tolerate higher taxes, the states ca-
nnot or will not bail them out. This house of cards is about to fall down.  A so-
lution is needed if the Democrats are to retain power.

Just when all seems lost, a few smart but shifty Democratic power brokers
found their possible salvation, Puerto Rico!

Puerto Rico is in the midst of a financial crisis.  he same old story, mis-
management and corruption.  This time however, Puerto Rico might solve
all the Democrats' problems.  The Democratic Power Elite came up with a
plan. Let’s use Puerto Rico to win the legal right to default on the City and
States municipal bonds.  It’s a great idea.  By declaring bankruptcy, we
can shed 40%-50% of the current debt.  It is like raising money without
raising taxes! Brilliant...

Let’s call it the Puerto Rico Debt Restructure Plan.  It will not only incor-
porate Chapter 9 bankruptcy for the municipal corporations, it will also
include special bankruptcy provisions for the general obligation debt. Once
it is granted to Puerto Rico, we can use it for Chicago and California. The
stupid Republicans will not see it coming.  Even if the Press figure it out,
they will be supportive in their silence.

If anyone contests our demands, we will call them racists!  We can also play
off the fact that Puerto Rico may not have been treated fairly.  Yes, Puerto
Rico is the answer.  Let’s get the press to demonize the bond holders and hed-
ge funds as vultures and run stories about how hospitals and schools will close
and the children will starve.  We own the Press, that will be easy.

We understand that over 50% of these bonds are owned by retired Americans
but someone has to pay for our promises. Let’s make sure the Press ignores
the real impact of this strategy.

Puerto Rico today and a dozen other cities tomorrow.  This doesn’t have to
stop! We could go one for decades with our fiscal mismanagement utilizing
this new bankruptcy strategy. Keep the money flowing, baby...


Richard Lawless is CEO of Commercial Solar Power, Inc. in Temecula, CA. The opinions  expressed  in the 

preceding commentary are exclusively his own and do not represent the  opinions of The Puerto Rico Monitor, 

its editors or advertisers.

Sharks Are Circling For Their Share Of Puerto Rico's Assets

Orlando Sentinel

Nelson A. Denis 

On Sept. 8, the governor of Puerto Rico unveiled a new economic plan
and demanded that creditors "share the burdens of the sacrifices." Un-
fortunately, the actual document — the Fiscal and Economic Growth
Plan — is low on shared sacrifice and high on creditor profit, and it is
geared toward a sell-off of the island's entire infrastructure.

In addition to a slew of austerity measures, the FEGP will establish a
five-person Financial Control Board whose members are nominated by
"interested parties," including Puerto Rico's hedge-fund creditors and
the U.S. federal government. This board will have "extensive subpoena
powers" and oversight authority over the entire government of Puerto
Rico.

The core FEGP proposal is the sale of Commonwealth real-estate assets,
and the establishment of "P3s" throughout the island: public-private part-
nerships that turn public infrastructure into private, revenue-generating
concessions...[CONTINUE READING]

Hedge funds tell Puerto Rico: lay off teachers and close schools to pay us back

Report commissioned by 34 hedge funds says government had been ‘massively 
overspending on education’ despite spending only 79% of US average per pupil

The Guardian

Rupert Neate


Billionaire hedge fund managers have called on Puerto Rico to lay off teachers
and close schools so that the island can pay them back the billions it owes.

The hedge funds called for Puerto Rico to avoid financial default – and repay its
debts – by collecting more taxes, selling $4bn worth of public buildings and dras-
tically cutting public spending, particularly on education.

The group of 34 hedge funds hired former International Monetary Fund (IMF)
economists to come up with a solution to Puerto Rico’s debt crisis after the is-
land’s governor declared its $72bn debt “unpayable” – paving the way for bank-
ruptcy.

The funds are “distressed debt” specialists, also known as vulture funds, and se-
veral have also sought to make money out of crises in Greece and Argentina, the
collapse of Lehman Brothers and the near collapse of Co-op Bank in the UK.

The report, entitled For Puerto Rico, There is a Better Way, said Puerto Rico could
save itself from default if it improves tax collection and drastically cuts back on pu-
blic spending...[CONTINUE READING]

Puerto Rico News Digest For July 15, 2015

WATER RATE HIKES BEING CONSIDERED

From Caribbean Business:

The executive president of the Puerto Rico Aqueduct & Sewer Authority (Prasa), 
Alberto Lázaro Castro, reinterpreted a statement made Monday by Jim Millstein, 
of Millstein & Co., during the Puerto Rico government’s meeting with its credi-
tors, where he alluded to a possible increase of the water bill. Although water ra-
tes are expected to rise beginning in 2018 as part of the utility’s long-term opera-
tional plan, a sooner-than-expected hike could be seen if Prasa fails to finalize a 
bond deal for much-needed liquidity to fund its capital improvement program, 
among other needs. According to Lázaro, what Millstein said at the Government 
Development Bank (GDB) meeting with investors had to do with Prasa's "finan-
cial model, which in agreement with its bondholders and its own organic law, in-
cludes possible rate adjustments." He added that "this is done in all offer docu-
ments to show what would happen if projections are not met."

PR WARNS CREDITORS AGAINST LITIGATION

From The San Juan Daily Star:

Puerto Rico government officials told creditors Monday that a lengthy litigation
process against the commonwealth will have a negative effect on the economy
that will hurt tax collections, which are the source of debt payments. “We are
trying to pre-empt that with an open transparent process with you all,” one of
the government advisers told creditors during a question-answer portion of Mon-
day’s meeting with creditors as part of the process to convince them to renego-
tiate new debt repayment terms for the $72 billion debt.The event was live-strea-
med from a Government Development Bank (GDB) link. GDB President Melba
Acosta, former World Bank chief economist and former International Monetary
Fund (IMF) deputy director Anne Krueger, as well as economist and American
University Prof. Andrew Wolfe briefed members of the investment community
on Krueger and Wolfe’s recently published report on Puerto Rico’s fiscal condi-
tion.

JOURNALISTS SUE OVER HEDGE FUNDS

From News Is My Business:

The Center for Investigative Journalism filed a civil suit Monday against the go-
vernment over its refusal to provide the names of the hedge funds that are getting
ready to renegotiate or demand complete payment of Puerto Rico’s public debt. The
lawsuit filed in San Juan Superior Court names Gov. Alejandro García-Padilla and
Government Development Bank President Melba Acosta as defendants and asks the
court to order them to turn over documents and information about the hedge funds,
the amount of bonds they hold, the names of the investors who make up the so-ca-
lled Ad Hoc group negotiating with the government, as well as certain other docu-
ments. In the nine-page document, the CPI, as the nonprofit is known by its initials
in Spanish, details how it has spent the last four months unsuccessfully requesting
information from the government, including lawmakers, about the identity of the
groups behind Puerto Rico’s $73 billion debt.

SCORES OF DEAD SARDINES AT LA PLATA

From Fox News Latino:

Almost 7,000 sardines have died over the last two days in a reservoir in northern
Puerto Rico due to the drought that has been shrinking the water supply for two
months, making this the third massive dying off of this fish species in less than
two weeks. The secretary of the Natural and Environmental Resources Department,
Carmen Guerrero Perez, reported the situation Tuesday in a statement that said the
fish perished in the Wildlife Refuge of La Plata Reservoir in Toa Alta. "We ask ci-
tizens not to consume or come in contact with these dead fish, since they decompose
rapidly and can put their health at risk," Guerrero said.