The Greek people were forced into punishing austerity by an international cartel of banks, and then adding insult to injury, their national patrimony was sold off to vulture capitalists. Now, the US Commonwealth of Puerto Rico is facing a similar fate if Wall Street goons have their way, and there is nothing to stop them since they own both major political parties. Puerto Rico's ruling class of course cohabited with the corporatists by accepting easy credit supplied by the Money Power. Public debt rose every year since 2000 and reached 100% of GNP in 2014. The nominal value of Puerto Rico's outstanding bonds are roughly eight times Detroit's. With interest on Puerto Rican bonds enjoying tax exempt status in the rest of the fifty states, they were a favorite of investors, but they also carry more risk because of Puerto Rico's burgeoning public debt, considered by the New York Times to be "unpayable". The island has been suffering an economic contraction for a decade since tax incentives for US corporations were entirely removed by Congress in 2006. Pharmaceutical companies moved their operations from the island because it was no longer cheap to manufacture there. As a result Puerto Rico now has 11+% unemployment and over 300,000 residents gone for greener pastures. Only 40% of the adult population is employed or looking for work compared to 63% for the mainland. Government services have been drastically cut back, but the island faces a potential humanitarian crisis as the Zika virus plays havoc with the public's health.
The US government has not been kind to its last colony. It still requires all goods to be shipped there on US vessels under the Jones Act. So Puerto Ricans must pay tariff and transport-inflated prices for all goods, foreign and domestic. Nor does the nation have the option of bankruptcy to force haircuts on bondholders like US cities do. Consequently, vulture funds have been buying Puerto Rican debt like ripe bananas, banking on being able to force the commonwealth into paying back every red cent that they bought for pennies on the dollar. And so far Washington is complying with the Street's cunning plan. Debt relief legislation is mired in a do-nothing Congress. Even the Democratic administration's proposed "debt relief" bill is a Wall Street wet dream. Despite its psuedo-clever moniker, PROMESA* would superimpose an unaccountable authority on Puerto Rico to manage its economy, issue more debt, impose terms on government agencies, and leave Puerto Ricans to pick up what remains of their public infrastructure and sovereignty. The puppet governor has already agreed to the take-over provided it does not compromise the Commonwealth's sovereignty. Send in the clown on a Greek horse!
Earlier this month Puerto Rico defaulted on its debt payment; it was a red flag thrown up by the puppet leadership to indicate no amount of austerity would be enough to enable repayment in full. The $422 million missed payment is just a tiny fraction of what Puerto Rico owes. Another $2 billion payment is due in July. Whatever debt relief is finally offered by their colonial masters, it will cost Puerto Ricans dearly, just like it did the Greeks. {17.07.15;The German Elephant}
*Puerto Rico Management & Economic Stability Act. This legislation actually wants to cut the minimum wage for the Commonwealth from the inadequate $7.25 to the ridiculous $4.25 an hour for new hires. It also authorizes the proposed Financial Control board to accept "gifts", an open invitation to corruption. A dark money group is currently paying for a propaganda campaign aired on national television urging support for PROMESA. That Wall Street is behind this abuse of logic is demonstrated by the fact that the three big bond rating agencies demoted Puerto Rico's bond rating to junk status after the government complied with their austerity demands, It laid off 30,000 workers, hiked water rates by 60%, cut civil service pension and benefits, and raised corporate taxes.