Friday, May 5, 2017
THE PUERTO RICAN BANKRUPTCY: THE FACE OF AMERICA'S TOMORROW
By Rafael Azul and Jerry White
Puerto Rico formally declared bankruptcy on May 3 before a special tribunal created last year. The island, a US territory, had budgeted $800 million for the next five years’ debt payments, far short of the $3.5 billion creditors are demanding. As expected, the creditors, which include large Wall Street hedge funds, rejected the offer.
With this declaration, Puerto Rico became the first US territory or state to place itself into a process like the municipal bankruptcies, which have become increasingly common in the United States. Officially Puerto Rico owes some $72 billion to various vulture funds and another $50 billion for so-called unfunded pension liabilities to public employees.
Since January 2, when newly elected governor Ricardo Rosselló declared the island in a financial emergency it has been an open secret that the MIT-educated leader of the New Progressive Party (Partido Nuevo Progresista-PNP) and former Hillary Clinton delegate at the Democratic National Convention would throw the island into bankruptcy.
While Puerto Rico was historically barred from declaring bankruptcy, Congress enacted a law last year allowing bankruptcy-like proceedings. According to the PROMISE Act legislation passed last year in Congress and signed by the Obama administration, a US Supreme Court justice will now appoint a tribunal to oversee the bankruptcy process. While this includes forcing creditors to accept a reduction in the principal and accumulated interest, it is certain that the interests of Wall Street will take precedence over those of working-class Puerto Ricans, just as it did in Detroit in 2013-14.
During the Detroit bankruptcy, US federal judge Steven Rhodes used the bankruptcy law to override state constitutional protections and slash the pensions and health benefits of city employees while organizing a fire sale of public assets. Rhodes was hired as an advisor by former Puerto Rican Governor Alejandro García Padilla in 2015, along with former New York Lt. Governor Richard Ravitch, who co-chaired Obama’s “State Budget Crisis Task Force” that called for nationwide pension cuts and financial restructuring.
At the time, Rhodes declared that Puerto Rico “was exactly like Detroit.” In fact, the island’s debt of more than $120 billion is larger than Detroit’s by a factor of nearly seven, and its liquidation will require even more savage attacks.
Accumulated interest represents at least two-thirds of the debt. The hedge fund managers and their high-powered legal firms are expected to fiercely oppose any measure that reduces their anticipated gains.
The new, and unelected, tribunal will be in charge or “restructuring” the island’s economy, i.e., destroy education, pensions, social programs; privatize public property; sack and further destroy the living standards of Puerto Rican workers, in the interests of bondholders.
As the New York Times noted Wednesday, “While the court proceedings could eventually make the island solvent for the first time in decades, the more immediate repercussions will likely be grim: Government workers will forgo pension money, public health and infrastructure projects will go wanting, and the “brain drain” the island has been suffering as professionals move to the mainland could intensify.”
The outcome is likely to be even worse than the fiscal plan outlined by Governor Rosselló, which calls for shifting all current government workers from pensions into 401(k)-style retirement plans. Current retirees will continue to receive their traditional monthly pensions, but the amounts are to be reduced by about 10 percent on average. The governor says this is the only alternative to the sacking of 45,000 public sector employees.
The declaration of bankruptcy crowns a decade-long process of recession and austerity affecting the living standards of the Puerto Rican middle and working class, and causing an exodus of emigrants to the US mainland (an option not available to the thousands of undocumented Haitian, Dominican, Jamaican workers, and those of other nationalities, residing in Puerto Rico). Up until June 2015 the collapse in living standards had been tempered somewhat through the issuance of Puerto Rican bonds.
The bankruptcy declaration occurred two days after a general strike and massive Mayday protests and by thousands of Puerto Rican workers denouncing plans to gut workers’ pensions and benefits. The demonstrators marched on San Juan’s financial district, many wearing black shirts, and chanting, “Ricky is selling our island!” in a reference to the hated governor.
The marchers demanded an end to backroom deals and public meetings and participation on the debt negotiations and on restructuring. Large numbers of workers consider the debt illegitimate and refuse to pay for it.
The trade unions, however, are determined to block any serious struggle against the political establishment and the Wall Street banks. After a meeting with the governor last week, Lee Saunders, the president of the American Federation of State, County and Municipal Employees called on Rosselló to include the unions in the restructuring process. AFSCME has 13,000 members in Puerto Rico inside the Union Servidores Públicos Unidos (SPU).
In an interview with elnuevodia.com, Saunders said, “We think we should have a seat at the table, especially in discussions that have to do with the reducing health benefits and pensions. We may have ideas that should be heard.
“We are not alien to these problems. Although in the case of Puerto Rico this is a larger problem, we were involved in the bankruptcy of Detroit and we were responsible partners but with a seat at the discussion table. Some of our ideas were accepted, and the union proved to be a responsible partner.”
Indeed, AFSCME and the other unions played the key role in blocking the mobilization of the working class against the looting of pensions, health care and public assets and preventing the “civil unrest” bankruptcy officials anticipated.
Wednesday’s announcement is bound to increase social tensions and the class struggle on the island as the population faces the same predatory measures imposed on the workers of Detroit, Greece and elsewhere.
Since the announcement in June 2015 that Puerto Rican debt could not be paid, most of the austerity measures, including those under the terms of the PROMISE act, such as the closure of hundreds of schools and sacking of thousands of teachers, have impacted the working class and poor people. Already two-fifths of Puerto Ricans live in extreme poverty, by US and Caribbean standards.
Among those who oppose any federal rescue package is President Donald Trump himself, who declared his opposition in Twitter, saying that there should be “no bailout” for the island. However, the bankruptcy restructuring of Puerto Rico will set a new precedent for savage attacks on workers throughout the United States.
As the Times noted, “While many of Puerto Rico’s circumstances are unique, its case is also a warning sign for many American states and municipalities—such as Illinois and Philadelphia—that are facing some of the same strains, including rising pension costs, crumbling infrastructure, departing taxpayers and credit downgrades that make it more expensive to raise money.”
By Kathleen Martin
As the gap between rich and poor grows, so does the disparity in the attainment of higher education and, in turn, upward social mobility.
A study published in late April by the Urban Institute focused on wealth and social mobility shows that individuals from high-wealth families are more than 1.5 times as likely to complete two to four years of college by age 25 than those from low-wealth households.
Household wealth is measured by total family wealth relative to others in the study (including home equity), and upward social mobility is defined as “the likelihood an individual whose parents did not graduate from college completes at least two or four years of college.”
Participants of the study were broken into four household wealth quartiles: high, $223,438 and above; middle-high, $45,000-$223,437; low-middle, $2,000-$45,000; and low, $2,000 and less.
Data released last year in a separate study by the Pew Charitable Trusts gives a better idea of how many people in the population would fall into each category more generally. While both studies break data into different wealth brackets, loosely comparing the correlating statistics to correctly understand the placement of most Americans into these quartiles gives a better idea of how many people are actually likely to climb out of economic despair, or to have “social mobility.”
Nearly one-fifth, or 19.34 percent, of all US households total have negative wealth. Negative wealth means that the total sum of all debts exceeds the value of that household’s assets. If correlated to the results of this study, one-fifth of the population would automatically fall into the “low-wealth” quartile of $2,000 or less used in the Urban Institute study.
Others have noted that this section of the population with negative wealth is expected to increase rapidly in the near future due to the massive amounts of student loan debt weighing on millions of young college graduates today, with small likelihood of repaying the debt and even less likelihood of being able to afford a house or even a car of their own.
The authors of the study note: “We analyze total wealth, not relying exclusively on housing wealth.” However, the poorest households lost the greatest total portions of their wealth following the 2008 mortgage crisis, including what is commonly the largest contributor to a working class person’s wealth: their home. The youth participating in the study from this section of the population have only a 30 percent chance of completing two years of college, and a 14 percent chance of completing four.
“[O]nly 29 percent of youth from the bottom quartile of the family wealth distribution complete two or more years of college education,” the study notes, “and only 26 percent are upwardly mobile—that is, complete at least two years when neither parent graduated from college.” In comparison, 78 percent of youth in the top quartile complete two or more years of higher education, and 61 percent are upwardly mobile. The study also notes that this latter disparity widens when contrasting the differences between the quartiles and four-year degree completion.
The next quartile, low-middle, is a household whose wealth is anywhere from $2,000 to $45,000. According to the Pew data, 13.42 percent of US households have wealth ranging from zero to $19,999, with over half of that percentage falling closer to the low end. The remaining 6.31 percent makes up households with $5,000 to $19,999 in wealth.
The study did not gather specific information on academic success, employment during college, whether or not the participant had children, and what kind of institution the participant was enrolled in. This, too, makes a difference, given that the majority of low-income (and likely low-wealth) students cannot afford to attend 95 percent of American higher education institutions. Youth with family responsibilities and full-time jobs, unstable housing, and a host of other challenges are much less likely to have success academically than their wealthy peers.
While the parents of students from low-income and low-wealth families are not expected to contribute as much financially to the cost of their child’s tuition, and while overall the cost of attending a junior or community college is much less expensive than a traditional four-year college, the financial strain is proportionally greater on families with less money.
“These results suggest that family wealth can help children complete college, even holding constant other characteristics such as family income and education,” the authors of the Urban Institute concluded. “Wealth might provide the needed resources for families to get their children in and through college, or wealthier families may live in areas with better schools and social networks that help them get to college.”
Plenty of money for ILLEGALS……AMERICA’S OPEN BORDERS
HOMELESS ELDERLY in AMERICA UNDER MEX OCCUPATION
A Nation dies young, poor, addicted and homeless…. It’s the American dream as the rich get super rich!
According to the National Alliance to End Homelessness, the number of elderly persons who are homeless in the US will have doubled by 2050.
America’s Super-rich Live 15 Years Longer!
………….. America’s Bludgeoned Middle-Class Dies Young, Addicted and Poor!
THE IMPACT OF TRUMPERnomics AND THE MASSIVE
TRANSFER OF WEALTH TO THE SUPER RICH
AMERICA: One paycheck and two illegals away from homelessness.
"The economists found that the pre-tax share of national income received by the bottom half of the US population has been cut nearly in half since 1980, from 20 percent to 12 percent, while the income share of the top one percent has nearly doubled, from 12 percent to 20 percent."
SOARING POVERTY IN AMERICA’S OPEN BORDERS
TRUMPERNOMICS FOR THE SUPER RICH:
“In the US, the working class will confront a government unlike any other in American history, which will continue and intensify a decades-long social counterrevolution overseen by the Democrats and Republicans. The incoming Trump administration is manned by billionaires, generals and arch reactionaries. It is a government of, by and for the oligarchy, committed to destroying every remaining gain won by workers over the past century.”
EVANSTON, ILLINOIS surrenders to LA RAZA
THE MEXICAN OCCUPATION and LA RAZA SUPREMACY EXPANDS BORDER TO BORDER!
A municipality just outside Chicago, Illinois has now pledged itself to be a home for illegal aliens who want to be shielded from federal immigration law, officially claiming the mantle as a sanctuary city.
MEXICO INVADES, LOOTS AND EXPANDS ITS HEROIN MARKETS IN AMERICA’S OPEN AND UNDEFENDED BORDERS
“The greatest criminal threat to the daily lives of American citizens are the Mexican drug cartels.”
Much more here:
http://mexicanoccupation.blogspot.com/2016/12/the-american-border-with-narcomex.html ……post on your face book
“Mexican drug cartels are the “other” terrorist
threat to America. Militant Islamists have the
goal of destroying the United States. Mexican
drug cartels are now accomplishing that
mission – from within, every day, in virtually
every community across this country.”
OBAMA-CLINTONOMICS pounds America’s youth as they build a border to border Mexican welfare state on our backs!
AMERICA’S YOUTH STARVE
…… ILLEGALS SUCK IN BILLIONS IN WELFARE… they also get our jobs!
The new reports show that in addition to “traditional” coping strategies of skipping meals and eating cheap food, these teens and pre-teens are increasingly forced into shoplifting, stealing, selling drugs, joining a gang, or selling their bodies for money in a struggle to eat properly.
Posted by The Mexican Invasion & Occupation at 8:02 AM