Puerto Ricans Will Be Fleeing the Island in Droves
by John Lawrence
It's not just the fact that Puerto Rico has been devastated by Hurricane Maria. Even before the hurricane made any semblance of human civilization a thing of the past, Puerto Rico was mired in a debt crisis. Now the hurricane has left the people of Puerto Rico facing a double whammy.
The LA Times reported: "Two weeks after the storm devastated Puerto Rico, tens of thousands of hurricane evacuees are packing scheduled flights and charter jets in what officials there and in states across the U.S. fear is the beginning of a mass exodus of historic proportions. The mainland had already been absorbing record numbers of Puerto Ricans fleeing economic decline and a mounting debt crisis, with more than 700,000 migrating between 2006 and 2015."
Any Puerto Rican with half a brain in their head will take any means of transportation possible and head for the mainland. After all they are American citizens, and they need no visa or passport. They are essentially refugees with a ticket to the Promised Land unlike refugees from the Middle East, Africa and Asia.
Puerto Rico's government is more than $70 billion in debt plus $50 billion in pension obligations. People staying on the island would be stuck with it just like the Greeks were. Problem for the Greeks was that they were not American citizens so could not get out of paying the debt by leaving Greece. They were subjected to austerity.
Puerto Rico partied hearty, but now the party's over. It's time to call it a day. Or is it? Puerto Ricans can get out of paying the debt simply by moving to Orlando. The poor suckers left behind will have to deal with it.
Hedge funds own a lot of the debt, and they will probably be hung out to dry because they aren't going to get paid back by the few Puerto Ricans left on the island.They are on the hook for billions in Puerto Rican debt. Ha. Ha.
For instance, Autonomy Capital, a New York hedge fund run by former Lehman Brothers banker Robert Gibbins, owns nearly $1 billion of Puerto Rican general obligation bonds. FCO Advisors, a hedge fund run by former Goldman Sachs municipal banker Hector Negroni, is sitting on more than $400 million of Puerto Rican bonds as well. Another key player is Aurelius Capital Management, a New York hedge fund that lists nearly $500 million in Puerto Rican bonds. Aurelius, run by Mark Brodsky, won big by playing hardball with Argentina for years following that country's default.
The typical scenario where the hedge funds will subject their debtors to the harsh conditions of austerity will force Puerto Ricans to say, "Naa, who needs it?", and the hedge funds will be left holding the bag.
