Category Archives: Economy

2/3 of Puerto Ricans may flee to U.S. and overwhelm govt services

Puerto Rico map

Puerto Rico is an incorporated U.S. territory in the Caribbean with a current total population of around 3.6 million people, 12.5% of whom are black or sub-Saharan African. As such, according to Wikipedia, people born in Puerto Rico are “natural-born citizens of the United States.”

Three days ago on June 29, 2015, Puerto Rico’s governor Alejandro Garcia Padilla admitted the island is broke and asked that the commonwealth be allowed to restructure its debts under U.S. bankruptcy code. But Puerto Rico is not eligible for debt restructuring under the U.S. bankruptcy code because it is not a municipality.

Puerto Rico’s debt is $73 billion, while its GDP in 2012 was $103.5 billion, which means the U.S. territory’s debt is an astounding 70.5% of its GDP!

Alan Yuhas reports for The Guardian, July 2, 2015, that unable to pay its debt, Puerto Rico has begun rationing water, closing schools and watching its healthcare system collapse. Already, 45% of Puerto Ricans are living in poverty, and that percentage is sure to increase.

Puerto Ricans, being already U.S. citizens, are moving to America. Even before the bankruptcy, emigration to the mainland has accelerated in recent years. From 2003 to 2013, more than 1.5 million people had left Puerto Rico. Today, 60% of Puerto Ricans live in the States and 40% on the island according to a 2014 Pew report, with most moving to Florida. Cuny professors Edwin Meléndez and Carlos Vargas-Ramos predict that by 2020, it’s likely that two-thirds of Puerto Ricans will reside in US states.

Edgardo González, coordinator of the activist group Defenders of Puerto Rico, said that most Puerto Ricans are arriving in central Florida, but many cannot find jobs or even housing. González said, “Some might stay with family for a few weeks, but for those who don’t have family, people end up homeless because of the lack of services. People end up living in hotels, living in cars or on the street. Then you have people who are homeless with kids, who get in trouble with the law, and you have to get into it with childcare and welfare services.”

Making matters worse is the fact that professionals with higher degrees are leaving the island in search of work, draining Puerto Rico of the talent it needs to resuscitate its economy and healthcare sector.

In New York, fears of the wave of new immigrants have seeped into the city’s sizable Puerto Rican communities. On Wednesday the Bronx borough president, Rubén Díaz Jr, warned on NPR that the surge would sap the city’s services, especially in the cash-strapped parts of his borough.

The Bronx is poorest of New York’s five boroughs, with almost 30% of its population living below the poverty line. Almost 300,000 Puerto Ricans live in Bronx County, more than any other in the country, according to 2010 data; Brooklyn’s Kings County and Orange County, Florida, follow at second and third.

Puerto Rico continues to have people leave to the tune of 100 individuals on a daily basis,” said Díaz, who is himself of Puerto Rican descent. “We’re losing a doctor a day that is leaving the island and coming over here. The local governments here in the United States, we have to then absorb the added cost to our localities in order to provide services.

Díaz urged action by the federal government, saying Congress should give Puerto Rico the power to declare bankruptcy and restructure its debt. As a US territory, the semi-autonomous island does not have the same authorities that allow others to file for Chapter 9 bankruptcy, as Detroit did to cope with its own disastrous finances. “We’re not asking for a bailout, we’re not asking for the federal government to give Puerto Rico a dime,” he said.

White House spokesman Josh Earnest said this week that the Obama administration is not considering any form of bailout for the island.

The island’s non-voting delegate in Congress, Pedro Pierluisi, called for Congress to address the island’s political status, and introduced a bill that would grant Puerto Rico the powers to declare public enterprises bankrupt. Pierluisi advocates statehood for Puerto Rico, and characterized the island’s non-statehood in a letter to the New York Times as inequity: “No people have ever prospered while being treated unequally, and it is not reasonable to expect Puerto Rico to be the exception to that rule.”

But María Enchautegui, a senior fellow at the research thinktank Urban Institute, explains that the problem is probably more intractable than simply bestowing statehood or bankruptcy powers on the territory. Chapter 9 authorities “would be only for municipal debt, which is very small in the whole of Puerto Rico. So I don’t think that is going to solve a lot of the problem.”

Enchautegui suggested that Puerto Rico should restructure its varied debts not just to cut losses but to overhaul the government. “While we are looking at what agencies to eliminate or change, we could actually make a more efficient government,” she said. Restructuring public-private arrangements, as with electrical companies and utilities, could also bring in precious revenues.

Such changes would not require Congress’s intervention, although Washington would have to get involved to bring Puerto Rico’s Medicaid and Medicare systems to the same level as the rest of the states.

Enchautegui points out that the out-migration from Puerto Rico to America “is now more than 5 million people, most who keep relations with Puerto Rico, have family there they go and visit. Those could be human resources, capital and knowledge that can bring back investments, businesses, networks. They left the island, that’s the way they have dealt with the crisis, but they are very connected to it.”

See also:

~Éowyn

Proof that “liberalism is a mental illness” in one sentence

brain of the left

Liberals live in a world of make belief.

The country of Greece is officially in default as of 12:01 AM today.

Greece’s midnight deadline passed Tuesday for repaying $1.8 billion to the International Monetary Fund and other international creditors, deepening a financial crisis that threatens the country’s membership in the European Union.

Despite an 11th-hour effort by Greek lawmakers yesterday to secure a new 2-year debt deal before the deadline, European finance ministers reviewing Greece’s proposal concluded their conference call without offering a bailout extension.

After the deadline passed (at 6 pm ET), Greece has the distinction of joining Zimbabwe, Sudan and Somalia in being in arrears to the IMF. Fitch Ratings has downgraded Greece’s government debt further into junk territory.

From a Wall Street Journal article on June 28, 2015, “Greece Orders Banks Closed, Imposes Capital Controls to Stem Deposit Flight“:

“How can something like this happen without prior warning?” asked Angeliki Psarianou, a 67-year-old retired public servant, who stood in the drizzle after arriving too late at one empty ATM in the Greek capital.

How can something like this happen without prior warning?

Greece has only been in a financial crisis for the past FIVE years, since the end of 2009.

Greece’s retirement age is 61. That means the clueless Psarianou, being 67 years old, has been retired, living on government pension, for the past 6 years.

But wait!

Psarianou was a public servant government employee, which means he probably had retired even earlier, when he was 58, which means he’s been “retired” for the past 9 years! (“Civil servants” in Greece employed before 1992 can retire after 35 years service, if they have reached 58, and retire on 80% of their final basic salary.)

In contrast, years ago, Germany — the economic powerhouse that alone is sustaining the European Union — had raised its retirement age from 65 to 67.

Psarianou has all those German workers/taxpayers to thank for his government pension of the last 9 years. Suckers!

With news that Puerto Rico’s bankruptcy carries serious implications for the U.S., when the U.S. economy finally implodes from the $18.288 TRILLION national debt, which is now 103% of our GDP, and Obama’s continuing reckless spending, expect millions of Americans to whine like Psarianou:

“How can something like this happen without prior warning?”

By the way, the Obama regime is rigging the national debt because it has stayed frozen for the past 15 weeks.

H/t Powerline

~Éowyn

America’s Greece: Puerto Rico is bankrupt

Puerto Rico map

Reuters reports that yesterday, June 29, 2015, in a televised address, Governor Alejandro Garcia Padilla said Puerto Rico faces bankruptcy and asked that the commonwealth be allowed to restructure its debts under U.S. bankruptcy code. But Puerto Rico is not eligible for debt restructuring under the U.S. bankruptcy code because it is not a municipality.

Note: Puerto Rico is an incorporated U.S. territory in the Caribbean with a total population of around 3.6 million people, 12.5% of whom are black or sub-Saharan African. As such, people born in Puerto Rico are natural-born citizens of the United States. The territory operates under a local constitution, and Puerto Ricans elect a governor. However, Puerto Rico lacks voting members in the U.S. House of Representatives and the U.S. Senate, both of whom have plenary jurisdiction over it under the Puerto Rico Federal Relations Act of 1950. A 2012 referendum showed a majority (54% of Puerto Rico’s electorate) disagreed with “the present form of territorial status” and preferred full statehood in the USA. (Source)

Governor Padilla said sacrifice must be shared by bondholders, as he called for Washington to allow a bankruptcy debt restructuring. Padilla said his goal is to come up with a negotiated moratorium with bondholders to postpone debt payments for a number of years.

The Caribbean island is struggling to relieve a $73 billion debt burden. It came to a crunch point on Monday – at the same time as did debt-laden Greece – after a dire report on its stability by former International Monetary Fund economists was released ahead of key deadlines on Wednesday to repay debt.

Steven Rhodes, the retired U.S. bankruptcy judge who oversaw Detroit’s historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment on Monday. He said Puerto Rico “urgently needs our help. It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer.” Rhodes said the island’s future hinges on gaining eligibility for debt restructuring, while stressing that bankruptcy would not be a “bailout.”

Padilla said, “Puerto Rico needs a complete restructuring and development plan, comprehensive and inclusive, that takes care of the immense problem we face today, not on a short but on a long-term and definitive basis. The alternative would be … halting of payments with all the negative consequences that this implies.”

Padilla said the next step must be to get creditors to agree to more favorable payment terms. He is establishing a working group to examine restructuring public debt, with a deadline to have a plan by Aug. 30. The legislature is required to approve the plan.

Former IMF economist Anne Krueger, co-author of the report commissioned by Puerto Rico which recommended debt restructuring, tax hikes and spending cuts, said, “The situation is dire, and I mean really dire.  The needed measures may face political resistance but failure to address the issues would affect even more the people of Puerto Rico.”

Gov. Padilla warned that, if Puerto Rico follows the report’s recommendations of debt restructuring and austerity measures, Puerto Ricans may face cuts in services as the government reduces spending, including fewer teachers, higher property taxes and suspension of the minimum wage.

But the report, made available late Sunday, said Puerto Rico’s fiscal problems are much worse than assumed and that the island needs to restructure its debts because tax rises and spending cuts alone would not be enough of a fix.

Bondholders, even those who own government debt that is generally regarded as sacrosanct, would have to take a hit under the report’s recommendations. The report recommended a debt restructure via a voluntary exchange of existing bonds for new ones with a longer or lower debt service profile.

The prospect of a debt restructuring spooked investors and sent the price of Puerto Rico’s benchmark general obligation bonds that carry an 8% coupon and mature in 2035 74514LE86=MSRB down nearly 10% to a record average low of 69.510 cents on the dollar. Shares of monoline bond insurers with exposure to Puerto Rico’s securities fell sharply. Assured Guaranty (AGO.N) shares fell 13.3% while MBIA Inc (MBI.N) dropped 23.4%.

The U.S. government seems unlikely to get involved despite months of talks between Puerto Rico and the U.S. Treasury about options to seek financial help. An unnamed White House source familiar with the situation said, “There’s no one in the administration or in D.C. that’s contemplating a federal bailout of Puerto Rico.”

See also:

~Éowyn

Why businesses go homo

Chobani Yogurt goes homo

That’s the title of FOTM’s latest in a series of posts on businesses or corporations pandering to homosexuals. See, for example:

Have you wondered why businesses do that, given the fact that LGBTs comprise at most 2% to 3% of the U.S. population?

Here’s the answer:

It’s all about the money. Homosexuals, especially the men, are known to be a demographic group that’s relatively well-off. See:

In a stubbornly-recessional economy, by “going homo,” businesses are hoping to attract the homo dollar — the pot of gold promised by the LGBT rainbow — while confident that they’ll retain heterosexual consumers. Truth be told, how many heterosexuals have actually boycotted businesses that’ve gone homo?

LGBT pot of gold

Case in point, according to Schaeffer’s Investment Research, on the day that the Supreme Court ruled 5-4 to legalize same-sex marriage across America, the states’ constitutional rights be damned:

…a bit of a bump for XO Group Inc (NASDAQ: XOXO). The parent company for The Knot, The Bump, and The Nest advanced nearly 4% in the immediate wake of the announcement, with some firms estimating the ruling will translate into a “gay-marriage stimulus package.”

The shares have backed off a bit, but are still about 1.1% higher on the day, at $16.23. XOXO’s site director told MarketWatch, “As we celebrate the Supreme Court’s decision to legalize marriage equality for the entire country, our study shows that LGBTQ couples are hosting intimate weddings, with a focus on the guest experience and lots of personalized details.”

…Meanwhile, other stocks that saw post-SCOTUS jumps include jewelry retailers Blue Nile Inc (NASDAQ:NILE) and Signet Jewelers Ltd. (NYSE:SIG), as well as luxury goods titan Tiffany & Co. (NYSE:TIF).

XO Group Inc., formerly The Knot Inc., is a media company that publishes multi-media content for couples who are planning weddings, moving in together, or having their child. The company generates revenue through online advertising, merchandising, registry services, and publishing. The company headquarters are located in New York City, with offices in several locations in the US and in China.

~Éowyn

Greek debt crisis: Banks to stay shut, capital controls imposed

An awful lot of debtl...

An awful lot of debtl…

BCC: Greek banks are to remain closed and capital controls will be imposed, Prime Minister Alexis Tsipras says. Speaking after the European Central Bank (ECB) said it was not increasing emergency funding to Greek banks, Mr. Tsipras said Greek deposits were safe.

Greece is due to make a €1.6bn (£1.1bn) payment to the International Monetary Fund (IMF) on Tuesday – the same day that its current bailout expires. Greece risks default and moving closer to a possible exit from the eurozone.

Greeks have been queuing to withdraw money from cash machines over the weekend, and the Bank of Greece said it was making “huge efforts” to keep the machines stocked. Greek banks are expected to stay shut until 7 July, two days after Greece’s planned referendum on the terms it had been offered by international creditors for receiving fresh bailout money. The Athens stock exchange will also be closed on Monday.

Eurozone finance ministers blamed Greece for breaking off the talks, and the European Commission took the unusual step on Sunday of publishing proposals by European creditors that it said were on the table at the time.

But Greece described creditors’ terms as “not viable”, and asked for an extension of its current deal until after the vote was completed. “[Rejection] of the Greek government’s request for a short extension of the programme was an unprecedented act by European standards, questioning the right of a sovereign people to decide,” Mr. Tsipras on Sunday said in a televised address.

“This decision led the ECB today to limit the liquidity available to Greek banks and forced the Greek central bank to suggest a bank holiday and restrictions on bank withdrawals.”

greece tweet

The Greek prime minister said he had sent a new request for an extension to the bailout. “I am awaiting their immediate response to a fundamental request of democracy,” he said.

The temporary closure of banks in Greece, and the introduction of capital controls, is very bad news for Greece. Greek people will have less money to spend and business less to invest; so an already weak economy will probably return to deep recession.

As for the impact on the rest of the eurozone, corporate treasurers and wealthy individuals will wake up on Monday wondering if their money is safe in the banks of other weaker eurozone economies.

Following the news from Greece the euro fell by nearly two US cents against the dollar in early Asia Pacific trade, Reuters reported.

The announcement comes after a particularly turbulent few days for Greece. The current ceiling for the ECB’s emergency funding – Emergency Liquidity Assistance (ELA) – is €89bn (£63bn). It is thought that virtually all that money has been disbursed.

The ECB was prepared to risk restricting ELA because the failure of the bailout talks cast new doubt on the viability of Greek banks – some of their assets depend on the government being able to meet its financial commitments, the BBC economics correspondent Andrew Walker reports.

He adds that it is a fundamental principle of central banking that while you do lend to banks that are temporary difficulty, you only do so if they are solvent.

broken-piggy-bank

See also:

As of 9:00pm last night, the AP tweeted this: @AP: BREAKING: Greece officially announces bank closures for 6 days, limits on ATM transactions.

Not good at all.

DCG

Know where to spend your money: Companies celebrate U.S. Supreme Court ruling to legalize homosexual marriage

Daily Mail: Companies have thrown their support behind the Supreme Court’s decision to legalize homosexual marriage nationwide by announcing a host of commemorative products and gimmicks. Several businesses marked the landmark decision to allow homosexual marriage in all 50 states across America with tweets of support, snazzy marketing gimmicks and new products.

Among the most creative ideas was Ben and Jerry’s ice cream, which announced it would temporarily rename its chocolate chip cookie dough to ‘I Dough, I Dough.’ The ice cream flavor will be available in a commemorative pint sleeve at participate ice cream shops for a limited time.

gay1

Another high profile firm – Google – changed the logo on its building in the Chelsea neighborhood of Manhattan to one that featured a rainbow flag. The company’s office is the second-largest after the company’s headquarters in Mountain View.

Meanwhile, Facebook commemorated the big day by allowing its social media users to put a rainbow overlay on their profile picture by clicking on a link, according to ABC News. CEO Mark Zukerberg led the way by changing his profile page to one that featured the bright colors.

Passengers who used car-service Uber took screen shots of the moving icons of vehicles in the app as they had rainbow flags trailing behind them.

gay2

The Maytag Man’s official Twitter account displayed two Maytag men as matching washer and dryer appliances. The slogan ‘perfect together’ was splashed across the image. And the tweet read: ‘Here’s to finding the one who completes you. #SCOTUSMarriage.’

gay3

American Airlines tweeted an image of a plane’s television screens decked out in the colors of the rainbow. It tweeted the message: ‘We’re on board. Diversity strengthens us all & today we celebrate #Marriage equality & the landmark #SCOTUSMarriage decision.

Twitter users like Airbnb used the hashtag ‘#LoveWins’ and tweeted ‘Dear Supreme Court, We hope it’s not too soon to ask, but will you marry us? Love Airbnb

Hoards of official Twitter accounts including American Airlines, The White House and Hillary Clinton changed their profile images to include rainbow colors.  Snapchat users were offered two filters with rainbow themes to celebrate the historic ruling.

The Supreme Court ruled on Friday that the U.S. Constitution provides homosexual couples the right to marry, handing a historic triumph to the American homosexual rights movement.

The court ruled 5-4 that the Constitution’s guarantees of due process and equal protection under the law mean that states cannot ban homosexual marriages. With the landmark ruling, homosexual marriage becomes legal in all 50 states.

As for me? I celebrated homosexual marriage by going to Chick-fil-A for dinner Saturday night!

See also:

DCG

Shocker, not: No high-deductible CalPERS medical plan in California budget

SEIU's best buddy...

SEIU’s best buddy…

Sacramento Bee: A proposal to add a low-cost, high-deductible plan to the state’s menu of medical insurance options was left out of the budget that Gov. Jerry Brown signed on Wednesday, although it could resurface later.

“Staff advise that those provisions weren’t included in the final agreement” that Brown struck with the Legislature, Department of Finance spokesman H.D. Palmer said in an email.

The governor wanted lawmakers to require that CalPERS, which negotiates and administers medical coverage for state employees and retirees, add at least one health plan to the state’s menu that would give subscribers lower monthly premiums paired with a tax-advantaged health-savings account. Since the state pays a percentage of premiums, a high-deductible pay would save money for the state and, by extension, taxpayers.

But high-deductible plans exchange those lower premiums for higher co-pays for visits to doctors and significantly larger deductibles for treatments, hospitalization and drugs. Employees bear those higher out-of-pocket costs.

Unions blasted Brown’s proposal, while some state experts questioned whether such a plan – common in the private sector – would save money. And the lowest-premium insurance that CalPERS offers is also its least popular, raising the possibility that state employees would stick with their high-premium plans even if offered a high-deductible alternative.

Although the proposal wasn’t in the budget, Brown could still resurrect it. The governor has said he wants to negotiate lower-tier benefits with labor unions, and he’s in talks with four groups right now. If any reach agreement for a cheaper plan before lawmakers adjourn in September, a bill could be rushed through for Brown’s signature. And with three more state budgets to craft before he is termed out, the governor could float the idea again in subsequent proposals.

While your insurance costs go up thanks to Obamacare (and some of us can’t afford insurance yet pay for others’ plans on our federal taxes), government employees reap the benefit of their unions donating to the democrat party. Enjoy!

DCG