Puerto Rico Deals Horrendous Blow to Wall Street — Suspends All Payments On Public Debt

puerto_rico_wall_streetBy Matt Agorist

In a devastating blow to its megabank creditors, Puerto Rico’s Legislature approved a bill on Wednesday that suspended the US territory’s debt payments until at least January 2017.

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 “services,” greasing the skids for the island’s financial dismay.

Along with suspending debt payments, the legislation suspended payment on all general obligation bonds which happen to be guaranteed by the island’s constitution. As Bloomberg previously reported:

Unlike the bonds of most states and municipalities, Puerto Rico’s 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 by selling bonds to plug annual budget deficits and pay for operating expenses — the same combination that brought New York City to the brink of bankruptcy in the 1970s.

As a result of the predatory lending tactics of Wall Street, coupled with the irresponsible nature of the state, Puerto Rico’s national bank is now prepped for receivership if necessary, according to the measure.

The Federal Reserve of New York has a long-standing relationship with Puerto Rico which has undoubtedly led to the territory’s 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’s report:

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.

It seems that refusing to take on more debt has created a terminal condition for Puerto Rico’s economy as the GDP remains stagnant, interest rates on their debt skyrocket, and citizens are fleeing the island at record rates.

As the Legislature met to discuss restructuring a $5 billion portion of the island’s debt, the Government Development Bank balked at the deal, noting that Wall Street has gotten them to where they are today.

“It is exactly the type of ‘Wall Street’ solution that led us to the precipice we are now looking over,” they said.

According to the Pew Research Center, 84,000 people left for the mainland U.S. last year. The unpayable mountain of debt and the resultant chaos in Puerto Rico is but the canary in the coal mine for the fiscal situation soon to be faced by other states who have long practiced the same heavily irresponsible borrowing practices.

In the short time that it will take most people to read this article, the US national debt will increase by $3,000,000. As it stands currently, the United States national debt is approaching $20,000,000,000,000 — a number now symbolic of the mathematical certainty that is the West’s financial collapse.

3 Things You Need to Save $2600 In Taxes This Year (Ad)

Matt Agorist is the co-founder of TheFreeThoughtProject.com, where this article first appeared. He is an honorably discharged veteran of the USMC and former intelligence operator directly tasked by the NSA. This prior experience gives him unique insight into the world of government corruption and the American police state. Agorist has been an independent journalist for over a decade and has been featured on mainstream networks around the world. Follow @MattAgorist

Activist Post Daily Newsletter

Subscription is FREE and CONFIDENTIAL
Free Report: How To Survive The Job Automation Apocalypse with subscription

8 Comments on "Puerto Rico Deals Horrendous Blow to Wall Street — Suspends All Payments On Public Debt"

  1. Greasing the wheels for the Rothschilds’ “Phoenix” global digital currency… right on schedule -> target date 2018, announced in a 1988 cover article in their publication The Economist.

  2. Alabama Mothman | April 6, 2016 at 9:39 pm | Reply

    Trillion $ bailouts …

  3. hvaiallverden | April 7, 2016 at 12:46 am | Reply

    This is good for the Poertos, and while at it, wack the entrie board and the leadership in your banks or whom did this to you, and hang them high.

    This is IMF (international mafia foderation) standard uperandi modus, drwon your land in debt, and while at it, make shure your gov. privatise the entrie nations, infratsructure and so on to electric power suply.
    And this bait is what I define as Robbing you land,

    This is what happend to Greece, Portugal, Spain, and so on, I whom had high regards about China and they truns out to equally f…. up as the rest, their face saving stupidity will enshure the decline to the bottom of the pitt, as in the Imperial banana republic UssA.

    And to the Poertos, the next boss, if that creep isnt able to putt Poerto Rico First, then that man isnt sutable for doing anything else than go with the garbage, put PR first, the rest can ou deal with.
    I know people from PR, pitty its been raped and robbed blind.
    And its people is scattered all over the globe.


  4. Pump and dump no island no beach no rock is left unturned by the unfederal zioist banks.
    Icleand the banks and there will be a thousand years of peace.

  5. Richard Kraus | April 7, 2016 at 7:55 am | Reply

    USA should shutoff all services to PR . The USA has it’s own problems with debt .

  6. Only one problem, who wants PR? We pay for their welfare, they do not pay tax. That is why they always reject becoming a state. This is exactly the kind of stupid the the Donald speaks of.

  7. lindajoyadams | April 8, 2016 at 1:38 am | Reply

    Domino effect of neglecting one part of the USA? We should not have let them be unrepresented either as their reps are only for show and not voting rights? Just responded in depth to this on my own site. We let things go on and then wonder why we are in trouble. we also used that island or target practice and let the also go with out help and help that empowers not keeps one downl Linda Joy Adams

  8. Never the less they still owe the bond holders (people that bought the bonds) money on the principle ( money they received from the sale of those bonds).Even if they were not of sound minds or incompatant at the time they signed contract.Other wise it is a scam and theft by deception by using a false claim

Leave a comment

Your email address will not be published.