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Thanks for year-end contributions to Laconia's WOW Trail

To The Daily Sun,

We would like to take the opportunity to thank the community for ira generous response to our year-end fundraising appeal for the WOW Trail. We realize there can be an overwhelming number of requests for donations at this time of year and we are grateful that you continue to include your community recreation trail among your annual gifts.

Together we will transform the underutilized, State of New Hampshire-owned, railroad corridor in Laconia into a vibrant year-round public recreation space for all residents and visitors to enjoy.

We are optimistic that we will be building Phase 2 later in 2016.

Allan Beetle, President
WOW Trail Board

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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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