Sunday, July 26, 2015

A TROPICAL PARADISE FOR THE RICH, A SINKHOLE FOR THE POOR

THE GUARDIAN
Puerto Rico debt crisis: austerity for residents, but tax breaks for hedge funds
July 24, 2015
by Alan Yuhas
"The Caribbean territory has courted some of Wall Street’s richest citizens, selling its debt and offering inducements while local people face high taxes and cuts"

Caught between the demands of billionaires, pro-bankruptcy activists and more than three million people plagued by unemployment, poverty and government debt, who would you choose? As Puerto Rico confronts the quagmire of its $72bn financial crisis, it has come up with an answer: humouring a few very wealthy people.

The island has for three years courted some of Wall Street’s richest citizens, from solitary investors to hedge fund elites. Last year it sold at auction hundreds of millions of its debt to various funds, displeasing many who believe the “vulture funds” only want a quick profit off Puerto Rico as it desperately tries to repay debt with high local taxes and austerity cuts.

Hedge fund manager John Paulson, best known for making billions off the 2008 subprime loan market crash, led the charge last year when he declared the island“the Singapore of the Caribbean”. His fund bought more than $100m of Puerto Rico’s junk-rated bonds last year.

MORE: http://www.theguardian.com/world/2015/jul/25/puerto-rico-debt-crisis-billionaires-hedge-funds-good-news