{"id":35411,"date":"2016-04-09T14:21:23","date_gmt":"2016-04-09T18:21:23","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=35411"},"modified":"2016-04-09T14:22:53","modified_gmt":"2016-04-09T18:22:53","slug":"puerto-rico-deals-huge-blow-to-wall-street-suspends-all-payments-on-public-debt","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=35411","title":{"rendered":"Puerto Rico Deals Huge Blow To Wall Street \u2014 Suspends All Payments On Public Debt"},"content":{"rendered":"


\n\"puerto_rico_wall_street\"<\/a>By Matt Agorist<\/a>
\nIn a devastating blow to its megabank creditors, Puerto Rico\u2019s Legislature approved a bill on Wednesday that suspended the US territory\u2019s debt payments until at least January 2017.<\/p>\n

Since 2000, Wall Street has conned the Puerto Rican government into a massive black hole of debt. After Puerto Rico handed them control of their federal bond sales, Wall Street executives tacked on hundreds of millions in fees for their \u201cservices,\u201d greasing the skids for the island\u2019s financial dismay.<\/p>\n

Along with suspending debt payments, the legislation suspended payment on all general obligation bonds which happen to be guaranteed by the island\u2019s constitution. As Bloomberg previously reported:<\/a><\/p>\n

Unlike the bonds of most states and municipalities, Puerto Rico\u2019s are exempt from local, state and federal taxes everywhere in the U.S. As a result, they are held by about half of open-end muni funds. The competitive advantage made it easy for Puerto Rico to double its debt in 10 years<\/a> by selling bonds to plug annual budget deficits and pay for operating expenses \u2014 the same combination that brought New York City to the brink of bankruptcy<\/a> in the 1970s.<\/p><\/blockquote>\n

As a result of the predatory lending tactics of Wall Street, coupled with the irresponsible nature of the state, Puerto Rico\u2019s national bank is now prepped for receivership if necessary, according to the measure.<\/p>\n

The Federal Reserve of New York has a long-standing relationship with Puerto Rico which has undoubtedly led to the territory\u2019s fiscal woes. In 2014, the Fed issued a warning to the Puerto Rican government telling them to grow the economy (i.e. take on more Fed debt) or watch their economy crumble. According to the Federal Reserve\u2019s report:<\/a><\/p>\n

The Island appears to face two alternatives: either manage its own economic adjustment and put the Commonwealth on a secure fiscal basis, or wait for outmigration and the discipline of the market to force an even more painful adjustment, particularly for those unable or unwilling to leave the Island. Thus, the demanding choices Puerto Rico makes today will affect its long-run economic prospects and the future livelihood of its residents. A better future for Puerto Rico requires decisive leadership today.<\/p><\/blockquote>\n