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Why The Puerto Rico Debt Crisis Is Such A Huge Threat To The U.S. Financial System

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Puerto Rico Map On A Globe - Photo by TUBSThe debt crisis in Puerto Rico could potentially cost financial institutions in the United States tens of billions of dollars in losses.  This week, Puerto Rico Governor Alejandro Garcia Padilla publicly announced that Puerto Rico’s  73 billion dollar debt is “not payable,” and a special adviser that was recently appointed to help straighten out the island’s finances said that it is “insolvent” and will totally run out of cash very shortly.  At this point, Puerto Rico’s debt is approximately 15 times larger than the per capita median debt of the 50 U.S. states.  Yes, the Greek debt crisis is larger, as Greece currently owes about $350 billion to the rest of the planet.  But only about $14 billion of that total is owed to U.S. financial institutions.  But with Puerto Rico, things are very different.  Just about the entire 73 billion dollar debt is owed to U.S. financial institutions, and this could potentially cause massive problems for some extremely leveraged Wall Street firms.

There is a reason why Puerto Rico is called “America’s Greece”.  In Puerto Rico today, more than 40 percent of the population is living in poverty, the unemployment rate is over 12 percent, and the economy of the small island nation has continually been in recession since 2006.

Yet all this time Puerto Rico has continued to pile up even more debt.  Finally, it has gotten to the point where all of this debt is simply unpayable

Steven Rhodes, the retired U.S. bankruptcy judge who oversaw Detroit’s historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment on Monday.

Puerto Rico “urgently needs our help,” Rhodes said. “It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer,” he added.

This is why I hammer on the danger of U.S. government debt so often.  As we see with the examples of Greece and Puerto Rico, eventually a day of reckoning always arrives.  And when the day of reckoning arrives, power shifts into the hands of those that you owe the money too.

It would be hard to understate just how severe the debt crisis in Puerto Rico has become.  Former IMF economist Anne Krueger has gone so far as to say that it is “really dire”

The situation is dire, and I mean really dire,” said former IMF economist Anne Krueger, co-author of the report commissioned by the U.S. territory, which recommended debt restructuring, tax hikes and spending cuts. “The needed measures may face political resistance but failure to address the issues would affect even more the people of Puerto Rico.”

So who is going to get left holding the bag?

As I mentioned at the top of this article, major U.S. financial institutions are very heavily exposed.  Income from Puerto Rican bonds is exempt from state and federal taxation, and so that made them very attractive to many U.S. investors.  According to USA Today, there are 180 mutual funds that have “at least 5% of their portfolios in Puerto Rican bonds”…

The inability of the U.S. territory to repay its debt, combined with the financial crisis in Greece, would have far-reaching implications for financial markets and unsuspecting American investors. Morningstar, an investment research firm based in Chicago, estimated in 2013 that 180 mutual funds in the United States and elsewhere have at least 5% of their portfolios in Puerto Rican bonds.

It is important to keep in mind that many of these financial institutions are very highly leveraged.  So just a “couple of percentage points” could mean the different between life and death for some of these firms.

And unlike what is happening with Greece, the private financial institutions that hold Puerto Rican bonds are not likely to be very eager to “negotiate”.  In fact, the largest holder of Puerto Rican debt has already stated that it is very much against any kind of restructuring

U.S. fund manager OppenheimerFunds, the largest holder of Puerto Rico debt among U.S. municipal bond funds, warned the island it stands ready to defend the terms of bonds it holds, a day after the governor said he wanted to restructure debt and postpone bond payments.

What Oppenheimer is essentially saying is that it does not plan to give Puerto Rico any slack at all.  Here is more from the article that I just quoted above

OppenheimerFunds, with about $4.5 billion exposure to Puerto Rico according to Morningstar, said it believed the island could repay bondholders while providing essential services to citizens and growing the economy. It said it stood ready “to defend the previously agreed to terms in each and every bond indenture.”

“We are disheartened that Governor Padilla, in a public forum, has called for negotiations with other creditors, representing and including the millions of individual Americans that hold Puerto Rico municipal bonds,” a spokesman for Oppenheimer said in a statement.

But Puerto Rico simply does not have the money to meet all of their debt obligations.

So somebody is not going to get paid at some point.

When that happens, those that insure Puerto Rican bonds are also going to take tremendous losses.  The following comes from a recent piece by Stephen Flood

Now, bondholders are at risk as are the funds which hold Puerto Rican bonds and, more importantly, those who insure them in the derivatives market.

Dave Kranzler, from Investment Research Dynamics has warned that there are signs that the Puerto Rico situation may not remain a local crisis for much longer.

He points out that share prices of MBIA, the bond insurers, have been plummeting. MBIA are valued at $3.9 billion whereas their exposure to Puerto Rican debt is around $4.5 billion. Kranzler reckons their exposure could even be multiples of that figure. A default could wipe them out.

He also points out that the firm’s largest shareholders are Warburg Pincus, the firm to which Timothy Geithner went after his stint as Treasury Secretary, when he helped paper over the chasms opening up in the financial system.

Did you notice the word “derivatives” in that quote?

Hmmm – who has been writing endless articles warning about the danger of derivatives for years?

Who has been warning that “this gigantic time bomb is going to go off and absolutely cripple the entire global financial system“?

When Puerto Rico defaults, bond insurers are going to be expected to step up and make huge debt service payments to investors.

But this just might bankrupt some of these big bond insurers.  In fact, we have already started to see the stock prices of some of these bond insurers begin to plummet.  The following comes from the Wall Street Journal

Bond insurers MBIA Inc. and Ambac Financial Group Inc. are down again Tuesday as concerns over Puerto Rico’s ability to repay its debt multiply.

Investors fear that both firms face the potential for steep losses on their promises to backstop billions of Puerto Rico’s $72 billion of debt.

MBIA’s stock closed down 23% Monday, and fell more than 10% before rebounding Tuesday. By late afternoon, the stock was down 6%. Ambac’s stock fell 12% Monday and was off 14% Tuesday.

Of course Puerto Rico is just the tip of the iceberg of the coming debt crisis in the western hemisphere, just like Greece is just the tip of the iceberg of the coming debt crisis in Europe.

So stay tuned, because the second half of 2015 has now begun, and the remainder of this calendar year promises to be extremely “interesting”.

  • Vote Hillary 2016

    Your “red alert” got an influx of comments and unwarranted attention. However, due to the economic recovery that is happening I noticed that some of your articles do not even get 100 comments. For example, the last article you published only had 57 comments.
    Obama’s approval rating has reached 50 percent. This is in part due to the economic recovery. Also the supreme court should be commended for ruling that gay marriage is legal in all 50 states. Love is Love.
    Per the ADP report 237,000 private sector jobs were added in June.
    U.S pending home sales are at their highest level in 9 years.
    GDP growth in Q2 is expected to be over 2%. Harsh weather is to blame for the tepid Q1 GDP numbers.
    Greece is really a non issue. I am sure the Troika will work out some sort of deal with Greece. It is also worth noting Greece’s GDP numbers have improved.

    • GetReal4U2

      I bet you couldn’t even type that without laughing…

    • Paul

      Your “Vote Hillary 2016” moniker says it all. You support a corrupt system that will implode soon enough. Now go back to watching MSNBC.

    • Hillbilly

      You really make me smile sometimes, not everyone gets your sense of humor but man this one had my side hurting!!

      • Mike Smithy

        Maybe “Vote Hillary 2016” is actually Michael posting that non-sensical drivel to yank our chain while having a good laugh? OK Michael, if it’s actually you, I think you have made your point by illustrating that Progressives are idiots. It’s sort of like Tyler Durden’s alter ego of “Million Dollar Bonus” on Zero Hedge. Too funny.

        • MichaelfromTheEconomicCollapse

          I am afraid that is not me. Someone out there is actually an enthusiastic supporter of Hillary Clinton in 2016.

          • variabletime

            That was probably Hillary herself!

          • VigilanteCaregiver

            Now we know what that server was re-purposed for!

          • Nosuchthingasrightorwrong

            “If voting made any difference, they wouldn’t let us do it” – M. Twain

        • VigilanteCaregiver

          Or that Annoying guy. He said he has multiple proxys.

          • Gay Veteran

            thought that was you

          • VigilanteCaregiver

            I thought it was you. Probably is.

    • MichaelfromTheEconomicCollapse

      Vote Hillary?

      Are you serious?

      • Mike Smithy

        Michael, you had me going their for a minute. It’s actually you. Am I right? You have a good sense of humor.

    • Mike

      You are very short sighted and suffer from short term memory loss.

      • ABetterWorldWaits

        “Vote Hillary 2016” is obviously an illiterate troll who possesses no brain, and, therefore, no memory. Keep up the good work, Michael! Those of us with a brain and the sense to use it, applaud you!

        • Not Sure

          Paid trolls. Russians have gotten very good at it. Even on the English-speaking boards. I’m sure that Obama has his paid trolls, too.

    • statue

      You keep forgetting the sarcasm tagz!

    • VigilanteCaregiver

      See my debates with Gay Veteran on previous postings. I proved it’s not love – it’s abusive.

      • Gay Veteran

        the only thing you proved is that you LIE

        • VigilanteCaregiver


    • lincolnlincoln2

      LMAO again

    • kfilly

      You must love being owned by the government. You must love being a slave! You definitely want to support a criminal. Yes, I for Hillary 2016 too. I am campaigning for her to be in prison where she belongs.

    • Gay Veteran

      WHAT economic recovery?

      “Labor Force Participation Rate in the United States decreased to 62.60 percent in June of 2015 from 62.90 percent in May of 2015. It is the lowest value since October of 1977. Labor Force Participation Rate in the United States averaged 63 percent from 1950 until 2015, reaching an all time high of 67.30 percent in January of 2000 ….”

    • Jerry C

      Stop what you’re doing right now. Call 9-1-1. You need help.

  • GetReal4U2

    Hmmm – who has been writing endless articles warning about the danger of derivatives for years?
    Michael…NO ONE can claim they weren’t warned…time is very…very…short…

    • MichaelfromTheEconomicCollapse

      I believe that you are quite correct about time being very short.

      • GetReal4U2

        Michael – there are quite a few people that read your articles. Thanks for explaining some very complicated economic factors and processes that, in all honesty, most should know. Your “most important thing” article speaks volumes for the watchman that God has called you to become…let the haters hate…while the rest of us prepare…things really are going to get a LOT worse…sadly…most either don’t care…or scoff at the truth…the pages of the Word of God are coming alive and few even know the times in which we live…I’ve shared your “red alert” article with many…

        • Dale Graley

          Matthew 24:39 …AND THEY KNEW NOTHING about what would happen until the flood came and took them all away. The word of God shows us the condition of the minds of people in the last days. Just as in the days of Noah.

          • GetReal4U2

            So very true…also…the days of Lot are used as an example…in BOTH cases…God took his TRUE believers out…before the impending judgment…get ready…September comes quickly…ushering in the “Year Of Jubilee”…

        • SunnyFlaSnotress

          McDonalds is worth 105Bil. Numbers of USA companies are worth 100s of Billions vs Puerto Rico’s 79Billion. It’s not that much when put into perspective,and it’s not due all at once.
          Financial companies belly up and take their investors,.. that’s their problem.
          The government doesn’t have to powder everyone’s butt.

          • GenEarly

            Yep that McDonalds needs to Pay for the DemocRat’s bankrupting PR! Who get’s to Pay for the DemocRats bankrupting Detroit?
            Your Presidente’ O-bamy will pay for it…….well not “personally” of course, just through your taxes. You Do Pay Taxes; Don’t you Comrade Snot? Got a job?
            “Ready for Hilliarity” is hiring…..volunteers, no pay.
            The billions for Clinton Initiative, you know is Non-Profit…….. if your last name isn’t Clinton.
            Are you Hilliarity’s cousin Snot from Floriduh?
            She talks about you all the time; the special needs cus with the post nasal drip.

          • SunnyFlaSnotress

            Comrade Snot.. I like that! lol..
            Gen.Early, I’m ready to buy a house in cash in Mike’s fearsome city by the Jade Helm Walmart. Don’t worry your pretty self over me.

      • smoke57

        If I recall correctly, last week’s news had several very rosy economic stories pertaining to employment and the economy. Today, we are back in the dumps.

        • GenEarly

          Propaganda just doesn’t last like it did when The “O” walked on water back in 2008.

    • smoke57

      Time is very short…for us. the people who have created these derivatives are looking forward to a brand new day of bailouts and bonuses.

    • FortuneSeek3rz

      There is no collapse coming, at least not in the U.S. There will be recessions and depressions, but the resiliency and the sheer economic power of this nation means there is no collapse in any reasonable time horizon. Doomsday prophets have a history of being wrong in the United States of America.

      • Allan

        Fortune have you read any of Michaels works? perhaps that they were wrong previously because they did not have $18.3 trillion Gov Debt and over $200trillion total debt, over 100m people on food stamps, the most small business foreclosures in history. All the TBTF banks with $trillions and Trillions of over leveraged Debt, and the world debt at currently over $1quaddrillion. Yes you are right they can keep this going
        , “BUT” everyday they do the debt bubble gets worse, and as it gets worse the end when it finally bursts makes the bursting all the worse. My Friend you have “Normalcy Bias” in short you are in denial. Which is why I am guessing that Michael writes the articles for people like your good self. God bless and good luck.

        • FortuneSeek3rz

          The world does not want the U.S. to fail through a derivatives collapse or any other means. Remember “too big to fail” in 2008? Well the U.S. is the “too big to fail” on a global scale. The Fed papered over 4 trillion dollars in bad debt and it did very little to suppress the global appetite for U.S. bonds and U.S. dollars. The collapse of the US would put an 18 trillion dollar hole in the global economy and that is NOT on any world leader’s radar.

          • Allan

            I am find that I unsure just how to respond to your line of reasoning, but to say Goodluck? If you (and your family) find yourself in a tight spot let some us know via this site and we will hopefully lead you into the right direction and possibly the Light! Gods love to you my friend.

          • GetReal4U2

            The collapse of the US would put an 18 trillion dollar hole in the global economy and world leader’s across the globe are aware of the damage they would suffer.
            sadly…that pails in comparison to the derivative’s exposure of the too big to fail banks…a major world wide economic collapse is imminent…it’s impossible to keep printing money out of thin air and pretend all is well…

          • Pete

            You got something here, Fortune..

            The U.S. may well be too big to fail. And maybe that’s why the Chinese, etc, continue to support our deficit obscene.

            It’s easy to be a doom-and-gloomer when the U.S. deserves to be taken to the wood shed but it is risk to bet against the U.S.

          • FortuneSeek3rz

            Doom and gloom predictions for the United States go all the way back to before the Revolutionary War.

            It’s amazing how many people thought the U.S. couldn’t win the war, then the U.S. couldn’t form a cohesive government, then the U.S. couldn’t survive the Civil War. The U.S. couldn’t survive reconstruction without another war breaking out. The U.S. couldn’t survive the depression. The U.S. couldn’t survive World War II.

            So here we are a few generations later, and the narrative once again says that the U.S. is somehow not going to survive a global recession even though the U.S. economy is the best in the world with total national assets valued around 120 trillion dollars? Sorry, but that is extremely short sighted.

          • Pete

            If you’re interested, see “The Accidental

            The book shows what America will dominate the 21st Century

          • FortuneSeek3rz

            I enjoy reading so I may take a look at that.

          • Pete

            I can honestly say the book impressed and the book changed my thinking.

            If you read it, let me know what you think.

          • Dougwrench

            I think we will survive. But things will be different. Like third world different. Way back when, 60% of jobs were not government jobs and 50% of the population were not relying on government assistance in one form or another. Or regulated to death.

          • GenEarly

            A Military risk too. Ask the late unlamented former dictator of Libya who was instituting a “Gold for Oil” payment plan.
            The USSA has become the Chief Enforcer Bankster of the World, but the Bankster Elites are now allowing the BRICS to have some of the “spoils” to counter balance their enforcer.
            The NWO is almost completed, Finance rules Politics, even creates political movements to fight each other for their financial gain of funding all “sides”.

          • GenEarly

            All together now…USSA! USSA! USSA!
            ProgreSSives of the NWO Unite!
            Derivatives? I don’t see no stinkin derivatives, Yo quiero mas dinero, Si’ mucho mas!

        • Jerry

          There are not over 100 million people on food stamps. There are less than 50 million people on food stamps.

      • Nemnor

        FortuneSeek3rz, what you fail to realize is that, ultimately, the economic system in the USA is NOT sustainable. That, eventually, the USA will face economic collapse without a fundamental change away from the current economic system to a sustainable alternative system.

        • FortuneSeek3rz

          There probably is a better system, but whether or not it is achievable from a civil consensus is another matter. In any case the current system in the U.S. can go much longer than most think, I believe. And in fact it already has.

      • Dale Graley

        They only have to be right one time!

      • GenEarly

        The Feral Reserve Banksters have consistently been “inaccurate” also. BTW, how’s the job coming along at Lehman Bros.? Are you VP of PR now? Custodial Supervisor for 7 years is a resume’ enhancer for sure.

        • Mr. Anonymous

          FortuneSeek3rz sounds very naive to me.

          He says the US economy can’t collapse, didn’t it already in 1929 or are the history books wrong? And it has recently collapsed. Atleast partially anyways in 2008, it would’ve turned into a full blown crisis had there been no bailouts.

          It’s been wheezing along ever since 2008 and the only reason it hasn’t collapsed further is because the fed continues to pump cheap dough into the system and maintains interest rates at an all time low for how many years now?

          But ultimately it hasn’t worked and now your starting to see the beginnings of that.

          You can’t keep printing money out of thin air forever and expect no consequences.

    • xpdAnonymous

      Find The.Luciferian.Doctrine.pdf
      jd file

  • Enrique R. DéZuardí

    At this height of the Game, im out. Its obvious this unsustainable system can sustain itself for God knows how long. Its useless to make any sence of it. Lets all go sleep in the end it is what it is..

  • K

    Michael, you have definitely gotten someone’s attention. The speed of the trolls getting here, the way your boards are being messed with. Remember they do not mess with the people who have it wrong.

    • MichaelfromTheEconomicCollapse
      • VigilanteCaregiver

        THEY GET PAID! I want to get paid!

        Great article, though.

        • K

          Sorry friend, these days they only pay for lies. For them, the truth is of no value.

          • Gay Veteran

            in that case VigilanteCaregiver can easily get on their payroll

          • K

            It adds nothing to the site, to try to start an argument.

          • Gay Veteran

            arguments can bring the truth to light

          • Jerry C

            Arguments based upon respect, sure. Yours, not so much.

          • Gay Veteran

            respect is earned

          • VigilanteCaregiver

            Then earn it.

          • Gay Veteran

            says the cult member

          • VigilanteCaregiver

            Okay, you’ve proven repeatedly that you’re incapable of debate and constructive arguments. I have made statements for the record and that will have to be enough. If anyone wants to see my position on things, they can review my history.

          • Gay Veteran

            incapable of debate? funny, when you are the one incapable of defending his own positions

          • VigilanteCaregiver


      • Gay Veteran

        that was a good article

    • Spot on 🙂

    • VigilanteCaregiver

      Nice K!

  • Bill

    I expect there will be a diversion (false flag) in the next 2-3 days to take attention away while financial band aids are applied where surgery is needed.

  • illinois on deck

    problem isn’t the 73 billion,that’ll be written off,the problem with pr like the mainland is that half their population is on some form of public assistance,ie don’t work ,don’t pay taxes if that does not change their fate is sealed (think Haiti)

    • Mike Smithy

      Yes. In all honesty, can anyone explain why Puerto Rico is a Commonwealth/Territory of the USA? Unlike Guam, they offer no strategic military benefit to the USA. I say sell it to China in exchange for the $73 billion.

      • corey

        China would gladly print $73 billion to own Puerto Rico. Then China can store nukes and bases there, next door to the US. That’s better than creating artificial islands as bases

        • Mike Smithy

          Thanks to Al Gore providing missile technology to the Chinese in exchange for campaign contributions, they can already strike the USA with ICBM’s from within China.

      • tom

        This is the dumbest comment ever. think Russia regrets Alaska? or France regrets selling half of N. America? Selling an island close to the mainland to a potential enemy of USA is treason.

        • Mike Smithy

          At the time, Russia and France really had no other viable options. At this juncture, neither does the USA. When you add the $500 billion California debt, $100 billion illinois debt and all the rest of the state and municipal debts to the $18 trillion federal debt, the USA has to start making hard decisions. No options are off the table, which includes selling all city, state and national parks to the highest bidder. To continue down this rabbit hole of insolvency is treason.

          • AzDi

            Perhaps that is Obama’s plan!!

          • tom

            USA’s debt to revenue ratio is a little of 100%. Many people have 100%+ debit to revenue ratios. Our 18 trillion and counting debt is VERY manageable. The best way is flat tax and massive spending cuts, but 2% compounding yearly cuts will also work. The Govt. will use inflation to solve the problem which will screw old people over. I own nothing but student debt so I say bring it on.

      • VigilanteCaregiver

        Can i buy it?

      • autofixer

        It was once important as it covered the approaches to the once important and American Panama Canal.

      • Ezequiel Gonzalez

        PR is the most important strategic military location in the Atlantic Ocean. Both over the water, and even more important under it….

    • DANA

      I remember a smug hipster commenting that their voters would just keep getting money from our pockets just like they always have. Obviously too misinformed to understand there isn’t enough money in everyone’s pocket to cover the bills. Now polls show a majority of this hip generation wants to leave the country. Shut up and get to work, you have bills to pay!

  • Alwaystomorrow

    The Economic Collapse Blog Has Issued A RED ALERT For The Last Six Months Of 2015

    Published 6/25/2015
    184 days until 12/31/2015.

    For fun, lets do a count down every day until the end of 2015 and see just what happens.

    • VigilanteCaregiver

      You do that – I’m going for a sandwich.

  • rat28

    73 billion is actually like a drop in the ocean. The US financial system is powerful enough to withstand a small crisis.

    • Ezequiel Gonzalez

      Or arrogant and dumb enough to turn it into a major crisis deeply affecting at least three major US cities, Orlando FL, Chicago IL, and New York, NY….

      unless they do want to start a major USA fiscal crisis and want to use the PR crisis as a trigger and scapegoat for it….

  • Lao Tzu

    Huh, you told the same thing when Switzerland de-pegged its currency from the Euro, yet the US goes on just fine.

  • corey

    $70 billion is not a lot of money compared to the US economy. The fed prints that much in a month for QE. I’m sure the fed will write a check and the crisis will go away. Easily solved with the printing press.


      You got it.

  • Vote Hillary 2016

    it saddens me that there is so much anti-Obama propaganda being spewed by the right. News outlets like Fox News should be ashamed of themselves.
    I am looking forward to reviewing a June BLS jobs report that shows over 200,000 jobs being added.
    As Obama so eloquently stated, the shadow of crisis has indeed past.
    I also wanted to mention that Obama has cut the annual budget deficit by over 50%.
    Americans everywhere are starting to feel the recovery. That is what truly matters.

    • Ben

      Excellent Post!

    • Ricky Loves Obama


    • I luv MSNBC

      A masterpiece

    • statue

      You forgot the sarcasm tags 😉

      • Gay Veteran


    • obamaphonesaregreat

      I hope the left stays in power. I want to hold on to my 12 Obama phones. I am a liberal arts major at a community college. I love working part time at Wendy’s

    • I luv my ebt and welfare

      I always conversate good things bout my boy Obama. My homie Barack give my welfare check and food stamps. I aint worried bout no derivatives bubble or stock market bubble. As long as my EBT I be happy.

    • Delusional

      Please tell me you aren’t serious.

    • VigilanteCaregiver

      Obama’s the worst presdient ever! It’s not propaganda – just look at his works and results. They’re terrible!

      • Gay Veteran

        I think he is giving Bush the Stoopid some mighty strong competition for worst president ever

    • VigilanteCaregiver

      Nice trolling by the way. Proxy servers or multiple emails?

    • forreal24

      Wow!! What are you smoking and where can I get it?

    • lincolnlincoln2


    • kfilly

      You are either dumber than a rock or a troll. Take your pick. There is no recovery. There never will be.

    • A Friend

      I urge you to reconsider your position on Hillary. Let’s take her views on gun control in light of this quote from George Washington.

      “A free people ought not only be armed and disciplined, but they
      should have sufficient arms and ammunition to maintain a status of
      independence from any who might attempt to abuse them, which would
      include their own government.”

      • Gay Veteran

        let’s face the awful truth, we are given the illusion of choice.

        • df NJ

          Both parties just suck so bad.

    • Gay Veteran

      Obama is a war criminal, using drones to murder innocent people, bombing Libya and creating total chaos, supporting terrorists in Syria.
      Obama is pushing for yet more “free trade” deals that will ship MILLIONS more American jobs overseas and which gives multinational korporations near unlimited power.

    • grumpyhillbilly

      Doesn’t it always seem like 200,000 new jobs were created every previous quarter until the number is unmodified at the end of the current quarter. The magic of Obama-dumba- dope-cheat a lot economics. However President Hillary would no doubt be a boon to pantsuit makers, if only we could afford them.

      • Gay Veteran

        what kind of jobs were created? manufacturing or waiters?

      • Ezequiel Gonzalez

        In any economy new jobs are being created every day. The problem is that many other jobs are being lost as well….

    • Molon Labe Girl

      I’m sure you are being facetious, both with your comment and with you screen name. Right?

      • Vote Hillary 2016

        Correct. Well spotted.

    • Orange Jean

      Chelsea… is that you?

  • Priszilla

    Certain financial instruments should be outlawed. If people have too much money they should invest it – in bridges, streets, railways, fruit and veggy markets – anywhere in the world. And put their name on it: this market was sponsored by Donald Trump, or Mike Smith, or Maria Shuslokova.

    • VigilanteCaregiver

      That’s theft renamed investment.

      • Priszilla

        No. That’s an example what people could do with their money if they aren’t allowed to create a crisis. They could also glue it to their walls. Or shred the bills and insulate their loft with it. The possibilities are endless.
        In Hong Kong you can donate money to the university and get a plaque with your name fixed to a seat in the auditorium: this seat was sponsored by …

        • VigilanteCaregiver

          Oh! Voluntary… sorry. My bad.

    • smoke57

      How about you earn it, you spend and invest as you see fit?

      • Priszilla

        Whatever, but then stop whinging about collapse and needing a bailout from the taxpayer when your bets go south.

        • smoke57

          Who is whining and asking for a bailout. That’s the problem with you LGBT’ers. You have received government permission for your type of lifestyle, now you want to push it on everybody who does not agree with you.

          • Priszilla

            What has the bank bailout to do with me having the same privileges and rights as you?

            People bet their money on rising or collapsing markets, on red or black in roulette, on horses and greyhounds. And when their bets go south they want the taxpayer to help them out or they threaten total financial chaos.

            Being forced by society to lie about my loves most of my life, I don’t trust many people. And that extends to my money. Cash at home is more useful than promise to get cash from ATM. Cash is also anonymous. Except rent and rental cars and airline tickets I pay my groceries in cash.

          • smoke57

            “What has the bank bailout to do with me having the same privileges and rights as you?”

            About as much as me asking for a bailout when my bets head south. I have never asked for a bailout.

          • Priszilla

            You felt offended when I spoke against derivative traders aka banksters.

          • smoke57

            No, I felt offended when you said that I would desire a bailout when my bets head South. I am not a “bankster.” I personally believe you to have communist leanings.

          • Orange Jean

            Priz, I hate to break it to you… but you are never going to have the same privileges and rights as most of us here. The reason? I seem to remember you saying you’re British. Go ask the Queen if you want more rights.

          • Priszilla

            I’m not British. I just live in Uk, pay tax and consume, because, among other reasons, here we have the right to marry.

  • Bob332

    Don’t anyone worry..Obozo will make it the 51st state and then make us pay the tab. The Congress let’s him get anything he want’s….sooooo, who will stop the man/boy tyrant?

    • jaxon64

      Exactly what I was thinking–
      As a side note, I was in Puerto Rico about a year ago for 2-days and Puerto Ricans are some RACIST people ! I don’t wish to characterize all Puerto Ricans but pretty much all of the ones I spoke to in the touristy and resort areas were VERY open about their racism.
      They consider the “true” Puerto Ricans to be light skinned and descendants of European settlers from the Iberian peninsula. They were very boisterous about THEIR illegal immigrant problem–Nicaraguans and Salvadorans flood into PR. They call them “mud people” ( made me think of harry potter and the mud bloods/muggles).
      Their racism aside, I think Puerto Rico’s problems with illegal immigration and the strain on the economy, system, services and employment opportunities because of the influx of so many illegals is a large part of their issues. Because of PR’s association with the USA, many of the illegals flooding our “territory” find a soft access to American citizenship since Puerto Ricans are considered US citizens–so they can anchor baby away in PR and get all of the bennies/entitlements.

      • Mike Smithy

        It is the same way in Guam and the CNMI. They are some of the most racist people I have ever met. As a side note, they are almost all registered Democrats.

      • Bob332

        I guess your visit did not help the economy LOL. Next time go to Hawaii. Keep OUR money in the country!

        • Ezequiel Gonzalez

          Your comment is a nonsense lie. PR does have its difficult. But they are not the ones you point out. Nicaraguans and Salvadorans in PR? really? Illegal immigration to PR is primarily from the Dominican Republic and Cuba, and these three nations, Cuba, Dominican Republic and Puerto Rico are as close as you can get…..

          by the way, PR are not considered USA citizens. Puerto Rican are USA citizens. And to take that away it must be done individually, one by one, as it is done in the continental United States. A very long process where th burden of proof lies where it should be on the accuser….

  • Mark Sivad

    Think of the scramble out of certain bonds if the bond insurers go under.

  • A Friend

    Now Puerto Rico and who’s next? CA or IL? Sure they say that PR is small & may not affect us but there is a term “death by a thousand cuts” for a reason. And we are certainly dealing with multiple blows. How about the toll that illegal immigration is taking on our finances?

    Illegal aliens sneaking into our country? Check

    Jobs and manufacturing gone overseas and to Mexico? Check

    SOME Illegals bring drugs and crime into our country? Check

    Anchor baby policy? Check

    Lawlessness occurring down by the boarder. Check.

    Historically I haven’t paid much attention to the Donald but I give him a thumbs up on this one.

    • df NJ

      Worker’s wages depressed for 30 years, check.

      • Mike Smithy

        Unbridled illegal immigration into the USA that perpetuated depressed worker wages over the past 30 years. Check.

        • jaxon64

          Much truth in this— a man used to be able to raise a family on a roofer, carpenter or mason’s salary. Now an employer will tell a skilled labourer who makes $15 an hour and wants $20 to go fly a kite! For $20 an hour he can hire 2 or 2.5 illegals from central America, plus if he is a small operation he’ll pay cash and avoid the health care and insurances that Americans cost them.

        • df NJ

          There’s no truth in this. If you study this issue at all it has very little to do with immigration. Greedy CEOs are just not willing to pay workers. Tax policy changes after Clinton discourage hiring.

          “2014 Continues a 35-Year Trend of Broad-Based Wage Stagnation”

          Wealth inequality in this country is stunning.

          “Bernie Sanders draws nearly 10,000 supporters in Wisconsin” Bernie Sanders populist rhetoric is playing well. The way you become a leader is find a parade and step in front of it. I think most Republicans are completely out of touch with minimum wage voters.

        • kenfrombayside

          Only an aroused population can halt the turd world invasion. Millions are part of the citizens’ army at numbersusa; many are members of FAIR and other anti-white genocide groups; return fundraising letters with letters protesting the third world assault; do your own gardening (I do!); give money to politicians who are on our side; and always go to the polls. Massive third world immigration is a form of genocide against whites. You can’t sit on the sidelines while this tragedy unfolds.

          • Nemnor

            ‘kenfrombayside’, ‘jaxon64’, ‘df NJ’ and ‘Mike Smithy’, most of you have a bit of a different perspective on most of the socioeconomic issues you all put forward.

            However, socioeconomic issues like stagnant wages, low wages, illegal immigrants, high unemployment and underemployment, are ALL getting worse and will continue to get worse, because US Capitalism is now decadent and is NOT able to generate long-term recovery by economic means alone.

            There is NO permanent solution to the issues you all raised, within the US Capitalist economic system.

    • Dale Graley


  • Vote Hillary 2016

    Just so you know I was being sarcastic in my two posts. Wanted to give everyone a good laugh. Frankly, I despise Hillary Clinton.

    • Jerry C

      Darnit. Never did like sarcasm; especially on the net since it’s so hard to know if it’s for real.

  • underaged

    And I double your huge to huge, huge. (Or is that huge squared?)
    NYT – 223K jobs added at 5.3% unemployed. But alas, wages are flat – we are doomed!

  • df NJ

    I heard about a funny bumper sticker:

    CAUTION: In case of rapture this car may swerve as my mother-in-law takes the wheel.


    just remember the line from West Side Story where Puerto Rican’s sing ” everything free in America ” sounds like it’s coming true 60 years later

    • df NJ

      But at least Puerto Rican women are absolute freaks in bed.

    • AlwaysHasBenn

      Always has been free, just ask most blacks and illegals we have had here for years..

      • Gay Veteran

        yeah, most of them darkies are on welfare!

  • grumpyhillbilly

    I always marvel at timing of events. Is PR trying to fly under the Greek radar with their announcement? Is this our big, but approved, crisis for something like Marshal law? Doesn’t it seem odd that no financial guru saw it coming, unlike the Greek crisis? Maybe it’s all a coincidence, but…

    • Ezequiel Gonzalez

      The crisis in PR was started by Congressional decisions in he 90’s, and they were warned of the consequences a long time ago. Even now, the situation is still manageable, if Congress modify some laws that are hurting PR badly. Even without those modifications, PR could survive about one more year, and who knows, if new investments pick up steam very fast, we may fly again, even without Congressional help.

      But most likely than not, without Congressional action, the down spiral will continue and about 10 months from now it will be too late for PR… and the reverberations from this collapse will badly affect New York, Chicago and Orlando, to start with…

      now, what would the Presidency, Congress and the supreme court would do about this? The ball in in their side of the court….

      There is a conspiracy theory that some bad people, Alex Jones called them globalists and banksters, [I would called them by their traditional name, but the z word is anathema almost everywhere], anyhow the conspiracy theory says that these evil leaders wants to start a major economic crisis in the USA…. if that were to be true, then they might be keeping the PR crisis on the pressure cooker, to explode it at the proper moment, triggering a major economic event in the USA economy…. using PR as a trigger and a scapegoat for the crisis….

  • Richard O. Mann

    Yes. The second half of 2015 looks to be very interesting, in a some what morbid way.

  • CharlesH

    Here’s the problem as I see it. Everyone today think they fit into that mold of “too big to fail” and will be backstopped by the Federal government or someone else – that they can gamble without taking the required fiduciary precautions. If the bond insurers have taken on more risk than they can adequately cover – who’s fault is that? THEIRS! If bond holders themselves have under-insured themselves for what investments they have – who’s fault is that? THEIRS! No where in any of this am I responsible for any of this. You want to gamble with your money fine – but don’t think you can gamble with mine. Personally – I think it’s only fitting that some of these firms go under and maybe then they’ll realize that they’re not living in an alternate universe. We’re all in one.

    • df NJ

      We need to outsource Congress to China and be done with it.

      • Slvrizgold

        Congress was already outsourced to Israel, probably before you were ever born.

  • Eric Tremblay

    The world was supposed to “explode” the day Greece would default on its depth. Well, Greece has defaulted and we have not seen any reaction on markets and our daily life continues to be the same.

    It is something kind of difficult to understand. I aggree with most analyses and predictions exposed on this blogs and many other as they are logical and very well documented. Why they always fail to predict the events? Has the economic system so much resilience that it can defy any predictible outcome and adapt to any economic problems?

  • gfmucci

    “Puerto Rico “urgently needs our help,” Rhodes said. “It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer,” he added.”

    Who’s going to bail us out after we bail out a bunch of incompetent, socialist political and corporate entities? I have known several mid-level professional Puerto Ricans in the US. I have never encountered such braggarts and arrogance about how great the tax situation is for Puerto Ricans as from those people. The chickens are roosting.

  • chet

    ” In Puerto Rico today, more than 40 percent of the population is living
    in poverty, the unemployment rate is over 12 percent, and the economy of
    the small island nation has continually been in recession since 2006.”

    In the u.s. today, more than 40 percent of the population sits right above or on the poverty-level, the real unemployment rate is way over 12 percent, and the economy of the u.s. has continually been in recession since 2006, and a technically has been in a depression since 2001.

    Welcome to Earth.

    • Ezequiel Gonzalez

      You guys are too consume by your worries and serious approach to world events…. the following is a fictional response to your comments about PR. Don’t take it too seriously. The grey aliens don’t like to be taken too seriously, or laugh upon, for that matter, but I just cannot keep myself from doing it. Enjoy!

      The difference between PR and USA, is that Puerto Rico…

      …is an archipelago that includes the main island about 40 miles wide and 110 miles long, two smaller populated islands (Vieques, where the USA navy used to have a bombing range, population 10,000, and Culebra, where they had another bombing range back in the 60’s population about 4,000) and a few more unpopulated smaller islands around the main island….

      [[Mona, Monito and Desecheo, between PR and the Dominican Republic would be ideal for the Navy to move the Guantanamo Bay Naval base. PR Government is not selling but a good offer, lets start it at 20 billions, will be seriously considered. Nice location, the Galapagos of the Caribbean, they are called, and much closer to the Grey partners, a couple of miles down under the sea.

      There is a prophecy going around that a huge rock will fall from heaven, hit hard between PR and Mona Island, and blow up whatever is there, at the bottom of the sea, causing a huge nuclear explosion….but if you have nothing there, no need to worry. Kaput, Uncle Sam, kaput!

      Anyhow, PR sits on top of one of the most important strategic points on earth, so if the United States leaves, other world powers will want to negotiate with PR …. China, Russia, The European union, or more specifically, England, Germany…etc

      The big question is if the United States would be allowed to leave PR at all.

      I mean, everyone in the UFO community knows that right under PR there is a huge underwater cave system where the so called grey aliens (reptilians spirits incarnated in_____ bodies) have been living for a long time. They are the ones who invited the United States to invade PR in 1898 and it is with them that the US sign a treaty of non-aggression and cooperation….

      Dulce, NM, my eye. Do you really think that the powers that be would allow some [Phil Schneider] individual to pinpoint the exact location of the USA-Alien underwater military complex, and get away with it…. now you know!

      But getting back to the comparison between PR and almighty USA, PR is relatively small, so if the greys have no objections, their chupacabra gimmick is really great, PR could enter into negotiations with any other world power, and for less than 25 billions PR could be back in business generating billions of dollars in revenue for whatever Metropolis negotiate with us, like we were doing for the USA before they choose to screw us over, in search for other bigger islands closer to the Mainland… to exploit….

      Good luck there!, and may the Castro brothers and their legacy of dignity against imperialism protect their country from the american sharks….

      As Ruben Blades likes to sing: tiburon que buscas en la orila….

      Meanwhile, if mighty USA falls, who would want to lift her up? safer to pray on the fallen than to to rescue a wounded beast: the biggest beast of them all…

  • Sandbagger

    Hey, maybe Russia will offer P.R. a line like they have Greece.

  • Eric Tremblay

    I do not know exactly what happens to my initial post but it disapared…I am new here, I may have done something wrong.

    Anyway, a very interesstin comment Drud. You are totally right, the real worl does not respond that fast.

    I may be a little disapointed since I have been reading these kind of alarmist news from more than 15 years and everytime, there was an unnespected event that saved us from collapse and appocalypse.

    We must not forget that there are other forces at work. They may keep the system running for a while. 😉


  • Chilller

    That “suffering” part is supposed to be incentive NOT to act this way!!!

  • GSOB

    The freedoms the institutional church enjoys in America will soon come to an end.
    Could it be a sign that the grafting of wild olives into the lump is coming to a close?
    ISIS wants that stockpile of chemical agents. They are inching their way to it as well as Israel.

  • montana83

    Democrats and leftists – financially destroying Greece, Detroit, Chicago, Baltimore and Puerto Rico and ruin soon coming to a municipality, county, state and country near you. Prepare for it. The Clintons will be billionaires by then and Obama safe in his $30 million house in Hawaii. You? You’re screwed.

  • scott

    Write it off. Start over.

  • Karl D

    It is not “a small island nation” last I checked! Yes, it is a small island…but…

    • Orange Jean

      Agreed, I can’t imagine why so many people write about Puerto Rico not realizing it’s part of the US and it’s my understanding they are US citizens. Yes, it’s not a state (still considered a territory) but people who are born there can freely move to the mainland, don’t need visas, etc.

    • Ezequiel Gonzalez

      No it is not a small island. it is aln island of average size. And yes it is a nation, and has been a nation much longer than the USA. Not a Sovereign nation, but a nation, and the transcendental type of nations, like the Jewish and Aramean nation.

  • sre

    Puerto Rico and Greece both have very small economies. A collapse of either would not mean much to the US because our economy is so large.

  • majorx

    We cant help ourselves how are we going to help Puerto Rico. We eventually need to let the world economy seek its own level as painful as that will be.

  • M&M

    Puerto Rico is More proof that the Leftist agenda is bad for everyone and they cant blame the Euro like Greece is trying to do now.

  • Elliott Sarpy-Fernandez

    So worst case scenario, what can the small guy do stateside?

  • Ezequiel Gonzalez


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