A Crisis on Ideological Grounds

“I never read the newspaper, it’s too depressing,” would say my students.

And my reaction?

“An informed citizenry is necessary to maintain a democracy, so you don’t have a choice. Your responsibility is to keep yourself informed.”

My students, by and large, loved me: They rarely, however, took me seriously. There was the time that I argued for ride sharing and car pools, but this, of course, was impossible, since what would happen if their child took sick, and needed to be taken from school?

“It’s precisely for you children, and their future, that you should give up your car!”

So the students continued driving to work, and listening to local radio, most of which were addressing the vital issues of what local star Maripily was currently up to, or speculating on what person infected local model La Taína with HIV.

But there were two or three subjects guaranteed to stir discussion: There was the fact that virtually everyone was scrambling to send their kids to private schools, since what happens when the teacher is sick? Well, they’re sent home, if there’s a home to be sent to, since most of the parents were working. So that means that the kids were on the street, and that was where you didn’t want them.

A sort of Stockholm Syndrome had overtaken them, those good students of mine, since how could they simply shrug, pay five or six thousand a year to a private school, all the while driving past a “free” public school? “Free” in quotes since they were paying for it via taxes. Shouldn’t they be pounding on the principal’s desk, demanding that he or she get a substitute teacher?

“I’d be shouting that if anything happened to my kids while they were out on the streets, I’d sue the pants off him or her,” I used to say. But no, there was no system of substitutes in Puerto Rico? Why? Well, there just wasn’t.

Nor was it the case that the principals were shouting, since for years I took the bus to Rio Piedras, home of the University of Puerto Rico, and went to the center of the city to take a bus to Caguas. Fine, but I had to leap over a drain that was spewing sewage, and had been doing so for months. The drain was immediately in front Hawthorne School, but where was the good New England outrage? Where were the parents, and where was the principal?

There can be no outrage without an implied belief in the system, and it has been that cynicism that has brought us to this default of more than 70 billion in municipal bonds.

“Son todos pillos,” they’re all thieves, said my students of the politicians.

“Then it’s our responsibility to elect politicians who are honest,” I would say.

More shrugs!

We all accepted it—the government was never meant to provide services, it was meant to provide jobs to all of our relatives when the party they supported was in power. Right—if we were part of the ruling / technocrat class, the government was meant to be a siphon for kickbacks and corruption schemes. So everybody had a story about their father or mother, laboring fiercely in whatever government agency it happened to be, but the three or four people around them? Hah, just sitting on their….

So the government got huge, and that meant unwieldy, and nobody objected when there were three or four agencies doing or more like not doing the same thing. So in my infant years in Puerto Rico, I would ask Mr. Fernández stupid questions, like…

“So why does Puerto Rico have twice as many people as Wisconsin on the government payroll, even though Wisconsin has—roughly—twice as many people? Oh, and it’s a lot larger….”

Mr. Fernández would sigh….

So the government borrowed for years, and then the winds of the coming crisis began to be felt, and what was our response to that? ¡Qué paguen los ricos! Or Let the rich pay, but tell me, somebody, who are the rich? I had breakfast with a Cuban guy who came here at age 8, started his company, which now employs 200 people, and so is he “un rico?” You bet, but why should he pay? If a Cuban is providing jobs to 200 Puerto Ricans, well, shouldn’t we be thanking him and not sticking it to him?

So the last time we went to the bond market, didn’t we know perfectly well what we were doing? Bonds usually yield a 3 percent interest, ours were going for nine to ten. Why was that? Because they were high-risk, and that was the only was to sell them. And who buys high risk? Hedge funds, and their nastier cousins, the vulture funds.

If capitalism courses through your veins, you would point out that the vulture funds do what vultures do in the woods: clear out the dead and rotting flesh. Those of a more liberal bent would say that, well, usury is usury.

So hedge funds make up about half of our holders of debt, but the other half? Retirees, 401K contributors, and in the fight between the hedge funds and the ordinary investor, guess who comes into the ring fifty pounds heavier, and fifty fights more experienced? Which is why, of course, they forced us to promise various things—like any litigation be done in New York, not San Juan, and …oh, wasn’t there something about paying them first?

So it’s going to be long and messy, because the only sure thing is that the lawyers will have a merry day ahead, since there’s no orderly was to get out of this situation, which means that everything will get into the courts, and then have to be appealed.

Yes, long and messy, but who ultimately bears the responsibility? Isn’t blaming the vulture funds like blaming the pusher for your cocaine addiction? Yes, the cabotage laws that require us to use on US flagged cargo ships are unfair…but wait, are they? Caribbean Business doesn’t think so, and here’s the link. And yes, The Walmarts and Walgreen’s are the dandelions on our economic lawn, but do you do your shopping at Colmado Morales?

And certainly the United States hasn’t bothered to do anything about our political status, and so for 115 years or so, we’ve been a colony. But we’re here in the Caribbean, and we’re surrounded by former colonies from Trinidad / Tobago up to Cuba. So why has Puerto Rico not done through peaceful or violent means what all the other islands have done? Is it really up to the US to figure out what to do with us? Trust me, if the answer is yes, and statehood were imposed, well, as a gringo, I think I’d stay home that day. OK—month.

And now, we have only 40% of the population working, the rest being subsidized with food stamps and housing and the government health card. Most of it coming from the feds, and isn’t it time to say that the colonial relationship between the Congo and Belgium is hardly the same as ours with the US? Or is that pitiyankee?

V. S. Naipaul once wrote, if I remember correctly, that the tragedy of the Caribbean islands is that they never developed a national idea of what they represented, of their purpose or mission in the world. We are, most of us, descended from slaves or pirates, and how far have we travelled?    

I have questions, I have no answers, but what do I know?

The answers are coming and…

…I don’t want to see them.

        

Puerto Rico and the Vultures

Here’s the thing about money: Very few of us understand it, and most of us fear it.

Nor am I an expert, which may or may not be a good thing. Because the experts will throw you into an ocean of terms and concepts and expect you to swim. What can I do? Tell you a simple story.

Two people in their mid-80’s did everything they were supposed to do, and did it very well. They worked hard, they were frugal, they sent their children to get Master’s degrees even though they themselves had never travelled to Europe. The husband invested in Puerto Rico bonds, which were considered safe, and which had the advantage of being free of taxes on the federal, state, and municipal levels.

They didn’t do the one thing that everyone with a little money should do: Spread it around. Don’t put your eggs in one basket: buy real estate, invest broadly in the stock market, and invest in bonds, and throw some money into a savings account. Why? Because if one thing goes sour, well, at least two of the others are likely to be OK. (I know, if there’s a general collapse of the market—a financial melt-down—you’re screwed, but so is everyone else, so we can all be miserable together, and hey—there’s always the beach!)

So Puerto Rico issued bonds, as does every other municipality, and a bond is nothing more than a loan that bondholders make in return for—usually—very low interest. Why the low interest? Because the investments are considered safe: The municipality will repay, since the growth in the economy will mean increased revenue.

Now, the elderly couple mentioned above? Well, the husband was an excellent engineer, but what did he know about money? So he went to the expert, who did know about money, and who told him to buy Puerto Rico bonds, which were excellent investments, and which were tax-exempt. Being a proud Puerto Rican, he did just that.

That may have been a mistake, and when the red flags were raised, a couple of years ago, the engineer’s son scrambled to sell all those bonds, some at a profit, most not. But what about me? Am I any smarter? Because when I was working, I contributed to my 401K plan, and did I examine my fund’s portfolio, to see if it had any Puerto Rican funds? Of course not, who does? And look, it’s not just Puerto Rico, it has been variously Detroit, Spain, Greece and Argentina. So I very likely hold some Puerto Rican bonds, and the likelihood is that every small investor, frugally saving for retirement, does as well.

Now then, for people like me who are unwilling or disinclined to spend ten or twelve hours a day watching their money and probing into global markets, trends, and politics, there are the credit rating firms, and their job—in theory—is to protect the investor. And these people do what I don’t, and they saw very clearly the writing on the wall, and were very open in their warnings. They said it again and again, and they lowered our credit rating notch by notch, until we were at junk rating.

This was a disaster, but one that only now is beginning to be felt, because what did Puerto Rico do? Here’s Bloomberg on the topic:

The U.S. territory sold the securities March 11, in the largest junk deal ever for the $3.7 trillion municipal market. The borrowing came the month after the island was cut to speculative grade, and gave officials enough cash to pay bills through June 2015 as they try to revive a shrinking economy. Most of the original purchasers were hedge funds, and first-day trading in the bonds exceeded $5 billion.

Date of article: 23 March 2014. And the amount of debt sold? 3.5 billion.

The whole thing was profoundly immoral, but was it a secret? Did it happen behind closed doors? Of course not, since I was reading all about it and scratching my head and thinking, ‘who in God’s name would buy this terrible debt?’

Well, we now know, and even more cynical was that the bonds were marketed specifically for the hedge funds and their more rapacious cousins, the vulture funds. Why? Because the minimum price was 100,000$, and if anybody out there reading this has that kind of money, well, leave a comment below, because I’d really like to meet you!

The politicians got into bed with the hedge funds and now? The left is gearing to go nuts about the austerity measures, as evidenced by this headline:

Hedge funds tell Puerto Rico: lay off teachers and close schools to pay us back

That’s The Guardian, hardly a fly-by-night operation. Because the hedge funds have been keeping an eye on the island, and they are perfectly capable of producing a chart like this:

OK—firing teachers makes a great headline, but wait: Can you explain why spending on education has soared while the number of students has plummeted? I’m a teacher, myself, and the last group of people I’d go after is educators. But has all of that spending actually gotten down to the teachers? Are the parking lots filled with Porches? Are students issued MacBook Pros every year?

Sorry—wrong questions. How’s this: Is there even any toilet paper in the schools?

So the hedge funds own how much of Puerto Rico’s debt? About half, according to The Nation, and yes, it’s hard to weep for hedge funds, especially as compared to the little kids trooping into Escuela Luis Muñoz Marín. But I might have some tears for the engineer—remember him?—who saw half his wealth disappear. Might just as well have gone to Europe.

And I’m especially sorry for him, since I know very well who is going to take the hit, because the hedge funds? They’ve already lined up counsel, they’ve already planned their strategy, and the little guy who is left standing by the mailbox? All he can do is read his investment statement, and watch his money go down the drain.

The other element in all of this, unfortunately, is colonialism, but I wonder if the real issue at hand will be addressed. Because it is not the big bad United States that imposed…. Nor is it the incompetent, lazy leeches down in Puerto Rico….

Puerto Rico has excellent professionals; we have the expertise to run our government. What don’t we have? The curse of colonialism is that it maintains you societally in a perpetual adolescence: You are never fully responsible, nor do you enjoy full rights. And how irresponsible have the politicians--and by extension all of us, since by the way, didn't we elect them?--been. Well, check out this graphic….

Enter the last part of the equation: An uninformed, ill-educated populace that despite the billions of dollars poured somewhere into our education system cannot tell me basic facts, such as what part of the island Mayagüez is located. I know: I used to teach the cardinal points in ESL classes for 25 years. And what will happen as the busses are cut, the schools closed, the benefits slashed, and the austerity begins for real?

I think I know, and oh…

Do I wish I didn’t.

The Nuncio Gets Away With It

I freely admit it: I’m out of control on the subject, though I had tried hard to rein myself in, since even I, a Norwegian-American, can summon up enough moral Nordic rectitude to deal with the Catholic church and its treatment of the sexual abuse scandals. At a certain point, there’s nothing more to say: Yes, the priests f…cked around and the bishops covered it up.

That said, the case of Józef Wesolowski certainly is unlike any other. You may remember, he was the papal nuncio for the Dominican Republic and the apostolic delegate for Puerto Rico, since one of the most crushing blows about not being an independent state is that we cannot have formal relations with the Vatican. Ouch—boys, that one really hurt!

Wesolowski showed complete lack of imagination in his sexual tastes, though it was shoeshine boys and not altar boys, but he was certainly industrious, since reports have that he had more almost 100,000 pornographic images on his computer. So on 21 August 2013, Wesolowski was recalled to the Vatican, as was another Polish priest, Wojciech Gil.

Well, that’s the official story. The unofficial story is that the archbishop of Santo Domingo was sufficiently alarmed at the press that was going to explode that he ran off to Rome and talked to Pope Francis, who recalled Wesolowski.

Can anyone believe that this pope is serious about the abuse scandal? Well, tell it to the numerous Romans who saw Wesolowski walking the streets of Rome, outside of Vatican City. Right, so when they got enough flak about that, they placed Wesolowski on house arrest, and then began the slow, tedious process of determining what to do with Wesolowski.

They did the only thing possible: They defrocked him. OK—here’s the catholicnews.com on the subject:

The Vatican announced in June that a canonical court had investigated Wesolowski on charges of sex abuse in the Dominican Republic and concluded by dismissing him from the clerical state, depriving him of all rights and duties associated with being a priest except the obligation of celibacy.

Guys? You’re expecting a man with a tenth of a million pornographic photos on his computer to be celibate? This creep is a predator with a major addiction to porn, and you think he’s gonna be celibate?

Right—so then it was a much-touted criminal trial, due to begin ten days ago. But Wesolowski’s lawyer walked into court, the morning of the first day of the trial, and announced that Wesolowski was in intensive care at a Rome hospital. Of course, of course, no one could say what ailed (or rather, what else ailed) the former papal nuncio, but remember, this is Rome, and those Italian tongue? They quite frequently wag.

So six days later, a Roman newspaper published a rumor of what I immediately suspected: The ex-prelate had arrived at the hospital confused and dazed from a mixture of alcohol and drugs. In short, Wesolowski was about to add the sin of suicide to the long list of others. So the trial was delayed, and then, three days after he was hospitalized, Wesolowski was released.

OK—it was eye rubbing, but was it worth writing about? Were we all just a little tired of it all? Yup, but I was still following the saga, when I came upon this:

The Vatican said in a June 15 statement that Wesołowski has been accused of a number of offenses, “some committed during his stay in Rome from August 2013 until the moment of his arrest, on Sept. 22, 2014.” Other offenses were allegedly committed when he was nuncio to the Dominican Republic and apostolic delegate to Puerto Rico, from 2008 to 2013, the Vatican said.

Read more: http://www.ncregister.com/daily-news/illness-forces-postponement-of-former-nuncios-criminal-sexual-abuse-trial/#ixzz3gXmCAYnL   

OK—it’s clear: While being recalled by the Vatican for an investigation of sexual abuses, Wesolowski had continued his predatory behavior under Francis’s nose. But in the statement above, is the Vatican alleging that Wesolowski committed offenses here, in Puerto Rico?

OK—followed the link and got this, in Italian. Do I speak the language? Of course not, but anybody who has studied Latin, French and Spanish can figure it out:

La prima udienza del processo è fissata per il giorno 11 luglio 2015. All’ex Prelato vengono contestati taluni reati commessi sia durante il suo soggiorno a Roma dall’agosto 2013 sino al momento del suo arresto (avvenuto il 22 settembre 2014), sia nel periodo trascorso nella Repubblica Dominicana, nei cinque anni in cui ha ricoperto l’Ufficio di Nunzio Apostolico (il 24 gennaio 2008 era stato nominato Nunzio nella Repubblica Dominicana e delegato apostolico a Porto Rico, uffici da cui si è dimesso il 21 agosto 2013).

OK—so that Vatican is not alleging that Wesolowski committed crimes in Puerto Rico, but who is? Well, as you can see in the clip below, a number of the parishioners are: Wesolowski had visited the island frequently and had stayed in the parish of St. Martín de Porres, apparently as a guest of José Colón Otero, a priest who was removed after allegations of abuse…

…OK, the story is wacky enough to warrant its own paragraph. According to witnesses, boys were seen staying over at the parish house, and the next morning they were unable to look anybody in the eye. So the Vatican at last looked into it, and then defrocked Colón Otero. So what did the pope do, when the ex-priest appealed the decision? Partially reinstated him, since it could there wasn’t enough “moral certainty” to convict him of abuse, only of violating the sanctity of the confession.

What’s interesting about this case is what hasn’t happened, as much as what has. The Dominican Republic hasn’t requested Wesolowski’s extradition, perhaps because they don’t have a treaty that allows them to do so. But Poland requested extradition, and got turned down. The reason? Diplomatic immunity. But what about now, when Wesolowski has been defrocked? Presumably, that no longer applies; on the other hand, it might.

What else hasn’t happened? Well, the church has played a very old game: Out wait your enemies. And so the problems in the archdiocese of Arecibo, and the predation of a papal nuncio or an apostolic delegate or whoever he was have been completely forgotten, because everybody has just discovered that we owe some undetermined billions of dollars.

That’s one explanation. But the conspiracy theorist in me can’t help but wonder: The island is overwhelmingly Catholic, especially in the upper classes. The quiet word can be so very effective, when whispered in the right ear. I can only believe two things.

Wesolowski committed crimes on American soil, and…

…he’ll never pay for it.

Who's Picking Up The Tab? Who Else?

Well, it must be true, because I read about it in The New York Times: The whole damned island is depressed.

Or not, since the financial crisis elicits varying responses of anger, rants, and problem-solving. Oh, and also a good deal of finger-pointing, as evidenced by this:

Yes—we spend 39 million a year to drive our governors around, and provide police protection, which is certainly needed, since the last governor laid off 20,000 people, and do you think he’d survive a bus ride through Cataño? Not likely. OK—then there’s this:

Well, the governor is sure that we’ll all be willing to make sacrifices, just as he and Wilma have, but allegedly his Ferragamo shoes cost nearly 700 bucks, when you add in our 11.5% sales tax.

Do I need to add more? A more serious blogger would look up the picture someone took of Melba Acosta drinking wine and eating lobster, although as I recall it, the wine was obvious but the lobster couldn’t be verified. At least I didn’t see it.

 

Found it! I'm serious after all!

What was the point? The point was that the financial crisis is not my problem, dammit, it’s the politicians who stole the money and gave suspicious contracts to their cronies borrowed and borrowed and now? Fuck ‘em!

Then we have the outsiders peering in, often with little or no knowledge of the island or the culture. So Don Young of Alaska thinks Puerto Rico is at the boiling point, ready for revolution; Paul Krugman, however, tells us that Puerto Rico is no Greece. Great to know!

Politics—of course!—gets into it. The folk favoring independence will tell you: The Jones Act that mandates that we use American shipping costs us a lot of money (does it? Who knows?) Statehooders: If we weren’t a colony and were a state, we could refinance our debt through bankruptcy, just as all the other states can. And lastly, the deluded group that holds that we are a separate country joined in a bilateral union with the United States? Well, along with Wilma and the governor, we’re all (meaning everybody but Wilma and the governor and the ruling classes) yes, we are all (please revisit last parentheses) going to have to make sacrifices. Oh, and the governor just stumbled upon those Ferragamo shoes at the Salvation Army—one of those lucky days!

It’s all nonsense, of course, since there are a lot of guys out there in the business district of San Juan who are wearing shoes every bit as expensive as the governor. And the 39 million for police protection for former governors? Look, in the face of 73 billion, it’s nothing.

What is something, and what no one is talking about, is that our government has 230,000 employees, as compared to the 110,000 public employees of the state of Wisconsin, and do I really have to trawl through the Internet to tell you that Wisconsin has almost twice as many people and a lot more land and also something called snow, a lot of which fell for six months between October and (probably) May, and which is hugely expensive to remove?

And you know, we’re all complicit in this, because although of course your mother or sister or brother-in-law or maybe the whole damn family are ferociously working public servants, veritably pounding the streets outside, pestering the passers by with offers to help the citizenry! Of course, of course, we all know that! It’s all the other lazy, shiftless, indolent-with-attitude shirkers that are clogging up the government. Still, it has to be said, there are a lot of everybody else’s brothers and sisters and whole damn families.

And those politicians? All of those thieving bastards that got us into this mess? Guess what—they’re there because we voted for them, and if we had been reading the newspaper, all those years, we could have seen very clearly what was coming, since it was the headline year after year about the government deficit, and the borrowing, and the issuing of more and more bonds.

But no, we don’t read the newspapers because it’s too depressing and the politicians are all crooks and they just steal the money and there’s nothing we can do about it. So now, all of a sudden, it’s the hedge-funds—read vultures—who are circling above and extorting exorbitant interest for that drop of water on the dying man’s tongue! Hah! Bastards!

God knows, it’s hard to defend a hedge fund, but if you need a loan until payday, where do you go? First to the bank, and then after they begin to look funny and then reject you, you go to the little payday loan store and then, if even that doesn’t work, you go down to the corner to the loan shark, and guess what? At this point, your rate is not the 3% that Banco Popular was charging you. And that’s where we are, folks!

So now we’re in trouble—enough trouble to get the government to commission the Krueger Report, which meant that three economists came down and told us what we’ve heard repeatedly and never acted upon. The tax base is eroding, we are uncompetitive in terms of labor costs, there’s no plan to develop the economy, and we can’t pay the debt or go back and get some more. Oh, and nobody is working or if they are, it’s in the informal economy—and who cooked up that term, by the way? Whatever happened to “black market?”—and a huge number of us are receiving benefits of some sort.

They walk among us, folks, since the guy who sold me the Perrier I’m now drinking told me, in passing, that he has both the state health card and the Department of Family card—the “informal economy” equivalent of “food stamps.” Another employee is working full-time but getting title 8 housing, because she’s supposedly unemployed. And a customer came in recently and complained that his cell phone got lost, and then when he went to replace it at whatever government agency replaces cell phones, well, guess what? Somebody made a mistake and he was listed on the wrong list, or the government changed providers, and so he has go to Sprint or somewhere, all because of the government inefficiency, and isn’t that outrageous? No, but what is outrageous….

But what I really wanted to tell you is the story of a guy who is painting my apartment and doing a wonderful job of it, though the work is coming along slowly, since he has a full time job, he’s in the Army Reserves and so that’s his part time, and he is still broke because he’s paying child support.

The point is, this guy used to have a construction company, with his father-in-law or ex-father-in-law. So the economy went bust and his company went bust, and then he couldn’t pay his child support, so he went to court, and then he went, in handcuffs and shackles, to a solitary cell, awaiting transfer to jail.

“I just sat there and shook. I mean, I saw my whole life go down the toilet. Look, when I had money, I paid! And so how is putting me in jail for six months gonna help? First, I’m gonna lose my job. Then, the army is gonna give me a dishonorable discharge, ‘cause they’re looking for any excuse to get rid of people and reduce the benefits they gotta pay. And when I realized that absolutely everything was gone, I broke down and sobbed.”

Guys? This is an army guy, this is a guy who does construction and likes chicks—fatally so. This is not a guy who breaks down and sobs.

He got two breaks: His ex-wife relented and talked to the judge, and I gave him some money for child support. So he’s free, except not, because after he finished the morning work of painting my apartment, he took public transportation to Bayamón, then walked 45 minutes under the blazing sun to his hospital job, and then worked his 8-hour shift, walked that 45 minutes back to the public transportation, went through three municipalities and stumbled on home. Dear Reader—did you get tired just reading that sentence?

Unsurprisingly, this guy gets sick a lot, especially now, when the sky has turned an eerie milky blue, since huge amounts of Sahara sand have drifted over the Atlantic and are now above us, slowly drizzling down and blotching our cars and acting like asbestos in our lungs. So not a problem, if you’re in air-conditioning all day and night, but that hour and a half that he’s walking daily on the streets of Bayamón? He’s got a sandbox in his lungs.

This financial crisis, as invisible as the Saharan sand, as felt and weakening and sickening, as insidious, as gradually and inevitably lethal? Yes, we are all complicit, but some more so than others, and if today the guy who has three jobs has failed to show up to finish the painting? I know perfectly well: He’s exhausted, he sleeping, and all he can handle today is one job, not two.

So the question is not the Ferragamo shoes or the lobster or the policemen driving our corrupt governors back and forth from the country clubs. Yes—we’re all complicit, but some more than others. And yes, we’ll certainly join you and Wilma, Guv, in making those sacrifices! But while do I feel that the burden of those sacrifices will not be felt by the people who are living and eating off the government? And why do I feel that you and Wilma won’t feel too much of a sting, either? Why is it, in fact, that I know perfectly well whose shoulders this is going to fall on, and you do too, and you’ve even seen him, or you could have, since he’s quite visible and quite exposed, as you drive past him, Guv and Wilma, in your air-conditioned SUV with the tinted windows and the police escort. Yes, he’s perfectly visible, that guy who’s going to made the sacrifices, that guy out there….

…walking the streets of Bayamón!