If you are one of those folks who last watched John Oliver when he took on standardized testing and haven't really checked back since because his other topics didn't grab you, it's time to check in again. (Note: if you are the reader who is also my mom, I should warn you that some of the language is rather uncouth.)
The Puerto Rican debt crisis has been brewing for a while, and it may not matter that much to you (though it should, because these are fellow Americans who are getting cut off at the knees). But if most of your focus is on the education debates, here's what you need to know about the debt crisis in Puerto Rico.
1) A huge amount of the debt is now owned by hedge funds.
2) Hedge funders are putting their own bottom line ahead of everything, including education and health care.
Imagine. Your neighbor borrows some money from you, and after making some payments on it, says, "I've hit a rough patch, and if I pay you off, I won't be able to pay the rent or buy food for my family this month. Plus, a tree limb fell on my roof last week and if we can't work something out, my whole roof is going to cave in, which is going to be bad for me and for the whole neighborhood. Can we work out a new deal somehow?"
Do you say, "Don't care. Just pay me now." Well, if you're a hedge fund, you do.
You may try to hide that message behind some baloney-filled PR. You may try to spin it as a "way forward," as did the hedge funders who proposed a "Better Way" for Puerto Rico that included recommendations like raising property taxes, firing teachers, and cutting Medicaid. As long as they get their money.
It's vulture capitalism, the same hedge fund money-grabbing that drives much of the charter and school policy arguments raging here on the mainland. When these folks start talking about how to "fix" education, it's important to remember Puerto Rico, where they are showing clearly what they value most.
They don't mind telling pensioners to take a haircut when they gamble and lose...I think Puerto Rico should do what I did at age 18 when I was hit by a car. I told the hospital they could take reasonable payments to recover their costs over the next 10 years as I joined the Army, or they could settle for nothing as I declared bankruptcy...Puerto Rico, tell them make a deal or take a hike.
ReplyDeleteThe major problem with telling them to take a hike is that no one will loan them money in the future (at least I assume that you would now want your retirement funds invested in PR bonds, but I suppose I could be wrong). It is likely that not coming to an agreement with the creditors and telling them to take a hike will require even larger cuts to PR spending than the agreement would require. That was also the case in Greece.
DeleteAnyone here know if your state retirement fund owns any PR bonds? Hedge funds only own about 16% of the bonds out there.
I will give you an epilogue T.E. After my recovery and prior to my enlistment in the Army the hospital sat down with my accountant friend and I. We detailed their cost to deliver my services. I paid them my entire pay check minus what I needed to maintain my uniforms for the next 8 years. They got their money by being reasonable and not gouging me for a rather inflated bill. I was in special forces so I was usually in field training or on assignment, I did not miss the money because I was busy and would not have spent it anyway. It hurt my financial position, going bankrupt would have been easier, but I believed in honoring my obligation and doing the right thing.
DeleteIf you want to see a great documentary about Puerto Rico, its people, its history ... from the point of view of Puerto Ricans themselves, then actress-director Rosie Perez' 2006 documentary "Yo soy Boricua, pa'que tu lo sepas!" is the way to go.
ReplyDeleteIf you've got 90 minutes to spare, I highly recommended Perez' labor of love ... just for the entertainment value alone.
Watch if for free here:
https://vimeo.com/145556599
Old Teacher identifies the underlying issue: in IL, the state says "we can't afford the teacher pensions" without massive tax increases and cuts but the teacher pension funds rightly say: "Don't care. Pay me." I say "rightly" because these problems were foreseen when IL failed to fund pensions. Likewise, as Oliver's piece points out, PR issued bond after bond rather than raise taxes or cut spending. Just as pension commitments must be kept, PR must meet its debt obligations or negotiate a re-structuring.
ReplyDelete