A Simple Solution to Puerto Rican Debt Crisis | Al Jazeera America - 0 views
america.aljazeera.com/...n-to-debt-crisis-dont-pay.html
banksters vulture-capitalism Puerto-Rico debt default debt-constitutionality
shared by Paul Merrell on 29 Oct 15
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While Puerto Rican leaders look for ways to address the island’s $72 billion debt, some say the solution may be simple: Don’t pay it. A small group of Puerto Rican lawmakers is pushing the idea that significant portions of Puerto Rico’s debt may in fact be unconstitutional. Manuel Natal, one of the legislators behind the effort, claims that up to 75 percent of what the island owes could be voided in court. “If debt was issued in violation of the constitution that debt is illegal and subsequently should not be paid,” said Natal. “It should be put aside, because in legal terms, it’s like it never happened.” This strategy, called “debt nullification,” has been used elsewhere in the U.S. to address fiscal crises. But in Puerto Rico's case, it all but promises a legal showdown with Wall Street hedge funds that own a significant portion of the island’s debt — investors that the government is now trying to bargain with. While Puerto Rico Governor Alejandro García Padilla has acknowledged that debt found to be unconstitutional should not be repaid, his administration has tried nearly every other option so far.
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After the White House quickly dismissed talk of a federal bailout, Puerto Rico’s government, and its congressional representative Luis Pierlusi, have pushed a bill to allow the U.S. territory access to bankruptcy proceedings. That bill has stalled in the Congress. Meanwhile, talks with a group of hedge funds were suspended. The gridlock over Puerto Rico’s fiscal crisis has led many to wish the debt would simply disappear. Now, that might actually be possible.
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Later in the article, the reasoning behind the argument that 3/4 of the debt is unconstitutional: the Puerto Rico legislature ignored a constitutional provision limiting annual debt to 15% of revenue, creating a dodgy organization serviced by a sales tax to evade the limit. 'Twould be pleasant to see some vulture capitalists get burned.