Posts Tagged ‘Luis Fortuño’

Running out of people’s money: Puerto Rico UPDATED

Tuesday, August 4th, 2015

Puerto Rico just defaulted for the first time

The commonwealth paid a mere $628,000 toward a $58 million debt bill due Monday to creditors of its Public Finance Corporation. This will hurt the island’s residents, not Wall Street. The debt is mostly owned by ordinary Puerto Ricans through credit unions.

And (emphasis added)

On Monday, Puerto Rico had to make a monthly debt payment of $483 million. Puerto Rico paid all its debt due except the $58 million due to creditors of its Public Finance Corporation. The government is strategically choosing not to pay the PFC debt because the entities that own the debt, credit unions and ordinary Puerto Ricans, have little legal power to fight back in court.

The Economist:

The PFC’s 99% missed instalment [sic] is unlikely to set off an immediate cascade of lawsuits or further defaults. Its paper is technically nothing more than a “moral obligation”, backed only by a flimsy letter of credit from the Government Development Bank (GDB), and is mostly held by pliant local investors like credit unions. Just three days before the PFC stiffed its lenders, the GDB duly made a $170m payment on its own debt. Nonetheless, the PFC’s default sharply accelerates Puerto Rico’s debt crisis: it extinguishes any hope that the island’s creditors might all emerge unscathed, and cuts off whatever access to short-term financing the government might have had left.

It may well have been Mr García Padilla’s intention to provoke a sense of urgency.. . .After the island passed its own version of Chapter Nine last year, federal courts struck it down, on the grounds that municipal bankruptcy falls exclusively under federal jurisdiction. That left the governor with no choice but to beseech America’s Congress to bring his territory under Chapter Nine, a plea that has so far fallen on deaf ears. By letting the weakest link in its payment chain snap, Puerto Rico has made the spectre of a chaotic, piecemeal default—which once seemed remote—immediate. In theory, that could spur Congress into taking swift action.

Even if the ploy of taking-oneself-hostage were to succeed, however, the extension of Chapter Nine to America’s overseas territories would not be a cure-all. That law would not cover the restructuring of Puerto Rico’s $13 billion of “general-obligation” (GO) debt, which is protected by a constitutional pledge that it must be paid before all other obligations,

What it comes down to is, Puerto Rico has triggered the biggest municipal default in US history (emphasis added)

It implies a sweeping default on much of its $72 billion debt burden, equal to 100% of Puerto Rico’s gross national product (GNP) and more than five times the debt ratio of California or Texas.

That’s what massive overspending looks like.

Former Puerto Rico Governor Luis Fortuño discusses how Puerto Rico can avoid defaulting on debt.

Instapundit calls it “RUNNING OUT OF OTHER PEOPLE’S MONEY.” Yes, but they government defaulted by screwing the people who elected them first, as I linked to above,

“The government is strategically choosing not to pay the PFC debt because the entities that own the debt, credit unions and ordinary Puerto Ricans, have little legal power to fight back in court.”

They ran out of their own people’s money, but you can be assured they will continue to spend like crazy because 20% of the workforce is on government jobs, which gives the ruling party a built-in constituency. As I have pointed out before, it’s in the governor’s best interest to keep those happy, even if it means to default on all debt in order to meet payroll.

Puerto Rico: A few thoughts on the economic crisis

Wednesday, July 1st, 2015

As you already know, Puerto Rico has run up enough debt to become the Greecespot of the Caribbean, which could have been averted, as former governor Luis Fortuño explained yesterday,

Fortuño was governor from 2008 to 2012, and lost since he insisted on doing what needed to be done. Listen to this 2011 interview with John Stossel,

The debt is only part of the problem,

and includes the staggering failure to adequately account for revenues and expenditures

which points to serious structural problems the current governor, Alejandro García Padilla, is not addressing, asking instead bondholders to “share the sacrifices.”

Here’s the situation as I see it:

It is not in García Padilla’s interest to improve the economy

García Padilla’s administration relies heavily on a large bureaucracy, and he knows his predecessor was voted out of office for trying to reduce it. Estimates show that the government of Puerto Rico has 160,000 employees too many. That’s enough of a voter base to keep him in office.

If the U.S. refills the ATM, García Padilla will claim credit for it; if the U.S. doesn’t, he has someone to blame.

And don’t forget that García Padilla and other commonwealth supporters lost miserably during the last plebiscite, when statehood won by approx. 60%. For as long as Puerto Rico remains in a financial swamp, García Padilla knows the question of statehood will be dismissed with “And They Want to Be a State?”
(Or as Ed Koch put it, “The People have spoken … and they must be punished.”)

Again, it is not in García Padilla’s interest to improve the economy.

Puerto Rico: Default

Monday, July 7th, 2014

Mary O’Grady writes, Puerto Rico’s Borrowing Bubble Pops
Moody’s measure of ‘expected default’ for Puerto Rico is higher than Argentina and Venezuela.

A Puerto Rican default should not surprise anyone. According to Carlos Colón de Armas, acting dean of the School of Business Administration at the University of Puerto Rico, for eight years from 2005 through 2012, government expenses exceeded revenues on average by approximately $1 billion annually. The dean told me by telephone that total commonwealth debt is now around $73 billion and in 2013 it was 101% of the island’s gross national product (GNP) up from 57% in June 2001. (Although gross domestic product is the most widely accepted measure of an economy’s size, it reflects the profits of large multinational corporations booked for tax purposes in Puerto Rico but not retained in the local economy. Therefore, GNP, a measure of what is produced by locals, is a more accurate tool to assess the economy.)

Unlike Luis Fortuño, the previous governor, current governor Alejandro García Padilla

increased expenses by almost $600 million in his first budget. While he is now cutting spending, the cuts are mostly from that increase, according to Mr. Colón de Armas. Some $500 million-$800 million in fat—from subsidies to special interests to funding for political parties—remains untouched in the $9.6 billion budget.

Fortuño lost by 12,000 votes since García Padilla (known as Agapito) promised the moon and the stars.

And there it goes: a certain default.


Puerto Rico: Would you like some fries with that?

Thursday, September 20th, 2012

Governor Luis Fortuño, campaigning for re-election, lends a hand at Wendy’s in Cidra.

Linked by El Ñame. ¡Muchas gracias!

Romney names Hispanic Steering Committee, “Juntos con Romney”

Wednesday, June 6th, 2012

Following the newly-released ad focused on jobs directed at the Latino market, Mitt Romney has announced his Hispanic Steering Committee aptly named “Juntos Con Romney”

Romney’s Hispanic Steering Committee leadership is comprised of former Secretary of Commerce Carlos Gutierrez; former Puerto Rico Attorney General Jose Fuentes; and former Administrator of the Small Business Administration (SBA) Hector Barreto.

Interestingly enough, other potential vice-presidential selections are also included – along with Rubio, Romney also named Puerto Rico Governor Luis Fortuno, New Mexico Governor Susana Martinez, and Nevada Governor Brian Sandoval as Honorary co-chairs to the steering committee.

Fortuño is a dynamic speaker and has made great progress rescuing Puerto Rico’s economy; because of him, Puerto Rico is now the second-most competitive economy in Latin America. On that alone, he would certainly be a good VP.

John Stossel interviewed him last year,

Rubio’s been a Senator since 2011. Likewise, Martinez and Sandoval have only been governor since 2011; so Fortuño is the most experienced.

However, of the four, I think Fortuño is the least likely to get the VP spot. For starters, it would take weeks to educate the public at large on the fact that Puerto Ricans are American citizens from birth, and, who needs yet another “natural born citizen” diversion at this point?

Javier Manjarres notes that Romney himself told him in 2010 that he would love to see a Romney/Rubio ticket.

Axelrod says that choosing Rubio would be “an insult to Hispanics”. Another Florida Republican who doesn’t toe the Axelrod line is Juan Eliel Garcia, who’s running for Congress in Florida,

By now, it’s time someone suggested to Axelrod that he himself is the insult.

The Carnival of Latin America and the Caribbean

Monday, April 16th, 2012

Argentine war heroes revealed to be henchmen in military dictatorship

What’s Behind Brazil’s Slow Growth?
Politicians in Brasília are depressing investment by placating manufacturers.


Army sergeant receives 2nd highest military honor

Progress and its discontents
A popular student rebellion shows that, as Chileans become better off, they want the government to guarantee a fairer society. Politicians are struggling to respond

The rich are the best Communists, and the NYTimes loves them: Camila Vallejo, the World’s Most Glamorous Revolutionary

20 US agents could be involved in Colombian hooker woe

‘Colombian miracle’ takes off

Juan Forero’s Interview with Colombia President Juan Manuel Santos (transcript)

When will anyone in the Spanish speaking media tell Pres BO to stop speaking in tongues?

Obama promises to tackle immigration reform in second term

Obama Promises Immigration Reform in Second Term

What Pope Benedict Got Wrong in Cuba

Ecuador: Failing Universities to Close

Juan Forero’s Interview with Guatemala President Otto Perez (transcript)

Vaccinations Begin in a Cholera-Ravaged Haiti

Mark me skeptical, Net illegal immigration from Mexico: zero

Mexico shaken by two earthquakes in 24 hours
A 6.9-magnitude earthquake has struck off Mexico’s Pacific coast, the second to hit the area in the last 24 hours.

Car-saturated Mexico City lets bicycle riders rule the roads on Sunday mornings

Peru rules out talks with Shining Path over hostages
The Peruvian government says it will not negotiate with Shining Path rebels, who kidnapped a group of gas workers in the south of the country on Monday

GOP strategists: Puerto Rico Gov. Fortuno is a sleeper vice presidential pick

Pricey gossip glossy’s new edition: ¡HOLA! Puerto Rico joins the celebrity news family

Weird news of the week: Puerto Rico paramedics detained in fatal shooting

Crime in Venezuela
No immunity here
A spate of kidnappings has embassies on edge

Chavez Predatory Appetite Sets Its Sight On Ripping Off The Workers

Chavez says ‘doing well’ after latest cancer treatment
Venezuelan President Hugo Chavez says his battle against cancer is “advancing” after he returned from a third round of radiotherapy in Cuba.

Chavez rallies supporters marking coup anniversary

The week’s posts:
Annals of smart diplomacy: Obama calls the Falklands the Maldives UPDATED

Summit of the Americas update: Hillary ties one on

A view from the Summit: A warm kiss

Colombia: Obama heading to the Summit of the Americas

After Chavez, the narcostate?

Argentina: Oil drama queens, and a king

Brazil: Dilma at the White House, another Latin American head of state slighted

Fortuño’s Plan to Energize Puerto Rico

Monday, February 13th, 2012

Mary O’Grady’s article in today’s WSJ, Fortuño’s Plan to Energize Puerto Rico
Tax cuts and regulatory reforms are increasing investment on the island
, nails it,

Mr. Fortuño says that he expects Washington to give him a carve-out for LNG tankers, but he doesn’t have it yet. He also says that a large part of the environmentalist push-back is political, suggesting to me that he ought to be more worried than he is. This kind of politics needs to preserve the status quo of the welfare state. And that implies blocking Mr. Fortuño’s development agenda no matter what it means to the poor.

Read the whole article.

Fortuño has made great progress, as he explained in this 2011 Reason interview,

Puerto Rico is now the second-most competitive economy in our hemisphere Latin America. [Correction: Puerto Rico is the second in Latin America, after Chile; fourth in our Hemisphere, after US, Canada and Chile, according to the 2010-11 Global Competitiveness Report, page 15.]

A huge problem, however, is the Puerto Rican mentality of dependence on the government: government jobs, Medicaid, unemployment benefits, welfare, Social Security, name it, the average Puerto Rican looks first to any of those and rarely, if ever, to self-employment or entrepreneurship, even when thousands of Dominicans and Haitians come to the island illegally to work off-the-books on their own.

As I was watching the film Runaway Slave last week, I kept thinking that Puerto Rico, in order to flourish, must get off the welfare state plantation.

Fortuño has his work cut out for him.


Fortuño for VP, and the Constitutional question

Tuesday, December 6th, 2011

In today’s WSJ, William McGurn posits,
Fortuño Favors the GOP
Puerto Rico’s Republican governor would be a fine choice for vice president.

He’s young, dynamic, and well-spoken. As a Republican vice presidential nominee, he could help with Latino voters in 2012.

And he’s not Marco Rubio.

His name is Luis Fortuño, and he’s part of a rising generation of Republicans pushing pro-growth, small-government agendas. Like many of these men and women, Mr. Fortuño is a governor. What makes him striking is that he’s governor of an American territory, Puerto Rico, rather than an American state.

“I’m flattered,” says Mr. Fortuño when a reporter pitches the vice presidency to him. “But what I’ve done in Puerto Rico hasn’t been about my own re-election or advancement. It been about doing what I think is right.”

Spend any time with Mr. Fortuño, and you will learn that high on his list of doing what’s right is ensuring government lives within its means. When he was elected governor in 2008, one out of three Puerto Ricans were working for the government. When he was sworn in, there wasn’t enough money to meet the payroll. In response, Mr. Fortuño cut spending and 20,000 government workers, provoking angry protests.

The governor stood his ground. Earlier this year, he signed a bill slashing individual and corporate taxes—and he says there’s much more to do. For example, because Puerto Rico is not connected to the U.S. electric grid, it gets 68% of its electricity from oil (against about 1% for the U.S.), making its economy especially vulnerable to high oil prices. Just last week, Mr. Fortuño won a huge victory when the Army Corps of Engineers issued a favorable preliminary ruling on a natural-gas pipeline that would run 92 miles from southern Puerto Rico toward San Juan.

Just yesterday I posted the Stossel interview,

Newt also interviewed Fortuño,

Fortuño is certainly a long-standing Republican member of the RNC, a Conservative whose speech at CPAC last year brought down the house (the people running the CPAC website are linking the wrong video, in case you try, but here’s an amateur video of the event), who worked as Resident Commissioner in Washington, DC from 2005-2009.

The first thing he did when he took office as governor was give himself a 10% pay cut. He’s cut red tape drastically, making Puerto Rico the second-most competitive economy in Latin America.

He’s also announced that he’ll run for a second term as governor of PR.

The article makes one glaring error, however,

Puerto Ricans have been American citizens since 1971

Puerto Ricans have been born American citizens since 1941.

The Constitution, Article II, Section 1, stipulates,

No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.

Now, here’s the situation: Puerto Rico is a Commonwealth.

Since the Office of Vice-President by definition means its holder is eligible for the Office of President, the discussion in the WSJ comments section focuses on whether Fortuño is eligible. He definitely was born a Citizen of the US, as are all Puerto Ricans born on or after January 13, 1941

All persons born in Puerto Rico on or after January 13, 1941, and subject to the jurisdiction of the United States, are citizens of the United States at birth

All of us who live in the 50 States can, and do, vote in all elections, including for President.

I’ll leave to you the discussion.

The larger issue, though, is, who will the Republicans have in the 2012 ticket?


The Independence Day Carnival of Latin America and the Caribbean

Monday, July 4th, 2011

Los últimos días de Néstor Kirchner

French Giants Vie in Brazil
Retailers Carrefour and Casino Face Off Over High-End Chain in Hot Market

Carta de la semana: “Decapitar la capital”

Por qué entré y por qué salí de las FARC

Preview of GMT’s upcoming title Andean Abyss

Hugo Chavez’s Secret

Bono’s Love Song

Take a ride with me

Via Gates of Vienna, Poll: Most Jamaicans believe UK rule better

Crime and politics in Mexico
A turning tide
With a year to go until the presidential election, voters are tiring of the drug war

“In Spain, I would still be living off scholarships.”

Project Gunrunner Assault Weapons Showing Up At Phoenix Crime Scene

U.S. opposes Mexican’s execution
The Obama Administration takes the rare step of urging the Court to block temporarily a state from executing a convicted individual — in this case, a Mexican national who contends that Texas violated his rights under an international treaty, the Vienna Convention.

July 4 warning: Texas says don’t go to Nuevo Laredo, Mexico

The trials of miners

Hydrocarbon production surges in Peru

Puerto Rico Governor Fortuno Signs Deficit-Reducing 2012 Budget
Worst Budget Deficit in the Country Cut by 81 percent in Just Over Two Years, Puerto Rico Continues Progress Toward Balancing its Budget

Among the reforms implemented since 2009, Gov. Fortuno enacted the largest tax cut package in Puerto Rico’s history, which will lower taxes an average 30 percent for businesses and 50 percent for individuals. And after launching one of the most advanced Public-Private-Partnership programs in the country, the Governor announced in June that Puerto Rico will receive $1.436 billion in private infrastructure investment—the largest such investment in any U.S. jurisdiction this year and the first infrastructure P3 in the country since 2006 – to upgrade and manage two of the Island’s major toll roads.

Fortuno took a 10 percent pay cut, required agency heads to take a 5 percent cut, froze all salaries for two fiscal years, reduced political appointments by 30 percent, and got rid of government cell phones and credit cards. Because payroll expenses dominated 70 percent of the budget, government employee ranks were reduced by 23,000 through voluntary and mandatory measures, achieving a $935 million or 17 percent reduction in total payroll.

Puerto Rico police chief quits amid crime concerns

Spanish newspaper: Chávez has colon cancer and the first surgery was a “mistake”

How bad is Hugo Chavez’s cancer? Very bad, say physicians

Hugo Chávez’s cancer puts 2012 Venezuela elections in doubt
As President Hugo Chávez fights what some experts say is an aggressive form of colon cancer, some wonder what it will mean for next year’s presidential race
I was talking to a physician friend who had not read this article but who reached the same conclusion based on the information that we have so far:

He also said it’s possible that the original abscess drainage procedure itself could have contaminated the area with cancer cells. Treatment, doctors agreed, would be aggressive radiation and chemotherapy.

“Prostate tumors normally do not cause this kind of abscess,” said Leon Lapco, president of the Venezuelan-American Doctors Association and a surgeon at Mercy Hospital. “I would say it’s his colon, the large intestine. It’s the most likely to cause diverticulitis, perforations and abscesses.”

Why Hugo Chavez’s Illness Matters

Chávez should get credit for economic miracle

After Chávez
What awaits Venezuela if he dies?

U.S. – Venezuelan Relations – Just Frozen or Beyond Repair?

What Hugo Chavez’s Illness Means for Venezuela’s Future

Noam Chomsky denounces old friend Hugo Chávez for ‘assault’ on democracy
Renowned American intellectual accuses the Venezuelan leader of concentrating too much power in his own hands

Noam Chomsky honesty appeal…

The week’s posts
Chavez back in Venezuela VIDEO
The Invisible Hugo and the list of rumors
HACER: The must-read on Latin America
The Invisible Hugo cancels summit
Today’s installment of The Invisible Hugo: The Video
The Invisible Hugo post of the morning: the speakerphone call


Obama in Puerto Rico

Monday, June 13th, 2011

My latest article is up,
Obama in Puerto Rico: How Will His ‘PR’ Stunt Play Out?
Expect a raucous welcome, but knowledgeable Puerto Rican voters in the U.S. know the island’s Republican governor has their economy recovering via his austerity measures.