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Froma Harrop - Who's for the grown-up version of capitalism?

Puerto Rico is sinking in $73 billion of debt. Mired in a long-running depression, the U.S. territory has already cut essential services to bare bones. Puerto Rico can't fully pay its bondholders without setting off total economic collapse.

One of two things can happen, short of doing nothing and setting off a humanitarian crisis. One is to let Puerto Rico restructure its debt in a federal bankruptcy court. The U.S. Treasury recommends that route.

A Chapter 9 bankruptcy would cost American taxpayers about nothing. Losses would be borne by the speculators who made the risky investments. The Financial Times has called hedge funds wagering on distressed Puerto Rican debt "bond predators."

The other option is to have U.S. taxpayers bail out the island with enormous transfers of aid.

Guess which path the hedge funds want to take? The taxpayer bailout, of course.

And guess which side Washington Republicans are on? The hedge funds'. Funny how fast these "fiscal conservatives" forget their distaste for bailouts when their Wall Street benefactors come knocking for theirs.

Puerto Rico's government debt comes with various levels of government guarantees, but none of it is safe. That some tax-exempt Puerto Rican bonds have recently traded for an average yield of nearly 42 percent illustrates how little that guarantee means.

Has the island's government been guilty of mismanagement? For sure. The investors knew that all along.

Wall Street's time-honored strategy for recovering from a bet gone south is to move the risk onto America's taxpayers. To pull it off here, the funds have to stop a Chapter 9 bankruptcy, whereby the negotiations would move where they belong — between them and the Puerto Rican government.

But Congress must first pass legislation letting Puerto Rico use the bankruptcy option. As the law now stands, American cities can go into bankruptcy court (Detroit was an example), but U.S. states and territories may not.

A bankruptcy proceeding would cost the bondholders, but a flattened Puerto Rico wouldn't be able to pay them, either. So Republicans are riding to the rescue with sneaky ways to get the American taxpayers to bear the losses.

Senate Finance Committee Chairman Orrin Hatch did a clever two-step. He blocked a vote on the bankruptcy legislation while proposing that U.S. taxpayers spend $3 billion helping Puerto Rico meet its obligations. The bondholders think that's a dandy idea.

Presidential candidate Marco Rubio initially showed interest in the bankruptcy bill and participated in the drafting. After all, huge numbers of Puerto Ricans fleeing the economic disaster on the island have settled in central Florida. They are now the U.S. senator's constituents — and also an influential voting bloc in a presidential swing state.

But then the Monarch Alternative Capital hedge fund apparently got to him. Rubio abandoned support for the bankruptcy bill shortly after Monarch's founder helped throw the first of two fundraisers for him.

The predators are now trying to confuse the public by calling the bankruptcy option — the true alternative to a taxpayer bailout — a "bailout." The Tea Party Patriots fell for the line. (Not so the conservative Americans for Tax Reform, which sees bankruptcy as a preferred alternative to transferring more taxpayer money to the island.)

BlueMountain Capital Management wrote, "Chapter 9 proceedings bail out Puerto Rico on the backs of the very bondholders Congress incentivized to invest in Puerto Rican municipal bonds."

Some bond predators have no shame.

Adding another chapter to the sob story, some Republicans are now arguing that a bankruptcy could hurt average Americans who invested directly in Puerto Rican bonds or through a mutual fund. Yes, this can happen when average Americans speculate.

That's capitalism, the grown-up version.

(A member of the Providence Journal editorial board, Froma Harrop writes a nationally syndicated column from that city. She has written for such diverse publications as The New York Times, Harper's Bazaar and Institutional Investor.)

 

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Staying home is not an option, unless you just don't care

To The Daily Sun,

At last, some in Washington refuse to speak the president's preferred rhetoric. If the president doesn't want the truth, they know the American people do and the directors of agencies responsible for keeping America safe are putting their country before their job and telling us just how it is. May all the politicians in Washington see the light and do the same.

Americans are strong and knowing the truth will not make us cower in fear. If history repeats itself, then it will make us come together for solutions. We just need a leader, not someone who prioritizes their wishes, desires and needs, but someone who understands that the needs of America must come first, that they are complex and change as world events continue to form the world in which we live. Two thousand sixteen is certainly providing us with a list of choices and all are saying something that speaks to us as individuals, something that echoes our own fears or needs. In choosing, we must put America first.

The Republican leader in the "poll of the moment" is Donald, successful businessman, well known for getting things done and brooking no incompetence. He is masterful in voicing our fears and anger and because he has been successful in the business world we believe that he will be successful in fixing all our nation's problems. The only problems he might run into are the other two branches of our government and "you're fired" won't work on them — unfortunately. I have yet to hear one candidate from either party state that they want to fundamentally change the way Washington works. That's a tough, but necessary, job no one seems willing to take on.

Dr. Carson is a very knowledgeable and likable man, but many will not be unwilling to trust our country to inexperienced political hands at this time. Is JEB! up to the job. He was a great governor in Florida so he has the understanding and skills but publicly stating you have "better things to do" doesn't seem like a winning way to the White House.

Male, female, black, white or Hispanic are not top priority qualifiers for me personally, but Carly offers the business foundation I would like to see in our next president because I do believe we need a knowledgeable person to turn our economy around. Government cannot provide jobs other than the ones "we the people" are paying for and I for one am tired of doing that. She has done her research which gives me faith in the advisers she would surround herself with and she speaks more definitively about what she would do than most candidates.

Chris Christie has run a Democratic state as a Republican governor so that seems to speak to his ability to lead both sides to a solution, a skill that I think will be critical in our next president, and he appears able to prioritize the country's evolving and changing issues.

Marco's message seems to speak to many people. He is definitive and he probably has the best understanding of our immigration problem, as does Ted Cruz. Border security is a top issue for this country as well as dealing with the millions of people "we the people" are supporting who are in this country illegally. However, there are thousands if not millions who live here illegally that are very productive members of our society and it is not their fault that our government hasn't done its job for years and allowed this to continue. I think Marco Rubio has a better way of dealing with the situation than most I have heard.

Rand Paul's speaks of our need to protect the Constitution and our Bill of Rights and I agree with him on that. Huckabee and Kasich are others with proven leadership abilities and their particular message speaks to many. This field will narrow as time marches on.

On the Democratic side we have several candidates. Hillary for those of you who wish to continue with another four years of divisiveness, costly growth of government in our lives, and you don't mind being ruled by someone who thinks they are above the laws of this land and is more than willing to lie to you.

Bernie should be getting as much press as Donald Trump, his message is rather similar except that Bernie has yet to tell you that "we the people" will be paying and Donald would get Mexico to pay. Martin is the former governor from Virginia so brings executive experience to the table but we hear little about him in the press, enough to make you wonder if he's still in the race, and on the debate stage he seems to have so few talking points.

There's also Elizabeth. Many of you don't think she's in the race, after all she said she wasn't, but have you seen all her ads/commercials/PSAs, whatever you call them, on Facebook. Looks like a campaign to me. Perhaps just in case our government agencies have the guts to go after Hillary like they did Martha Stewart or General Petraeus. I think she is more likely to jump in to save the day than Joe.

Not my top priorities, but America's. We will have two choices next November — staying home is not an option, unless you just don't care what happens to your country. You're not choosing a gender or a personality, prioritize our country's needs and choose one or the other. Only "we the people" can fundamentally change Washington with our vote.

Althea Dunscombe
Center Harbor

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