[Marxism] Fwd: Puerto Rico debt crisis: austerity for residents, but tax breaks for hedge funds | World news | The Guardian

Louis Proyect lnp3 at panix.com
Sun Jul 26 07:09:57 MDT 2015

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.

The most visible effect has been a rush to buy property akin to the 
buying spree by two billionaires in Detroit as that city filed for 
bankruptcy. Detroit’s woes are often held up for comparison to Puerto 
Rico’s but the island lacks the statehood or permission from Congress it 
would need to file for bankruptcy and follow Michigan’s decision to 
declare Motor City bust.

While funds have inched away from Puerto Rico’s debt debacle, Paulson 
has bought into land. In 2014 he spent more than $260m to buy three of 
the island’s largest resort properties, and announced plans to develop 
$500m-worth of “residences and resort amenities” to add to the existing 
beachfront condos and golf courses.

He has a fellow cheerleader in billionaire Nicholas Prouty, who has 
invested more than $550m into turning San Juan’s marina into a bastion 
of the elite that includes an exclusive club and slips for “megayachts 
of 200 feet or larger”.


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