Wednesday, October 9, 2013

Welfare Island





The chickens are coming home to roost these days. The latest sinking ship to make headlines is Puerto Rico. Affectionately known as "Welfare Island".

Conservative estimates place welfare and aid payments from the U.S. at around 4.6 Billion annually and some financial perks the Federal government has bestowed on their Muny Bonds making them tax free for all U.S. investors has allowed this island to rack up the public debt to the tune of some 70 Billion.

To put that debt load into perspective consider Detroit is going bankrupt with roughly a million people (I think it is down to 850K now) and 19 Billion in debt while Puerto Rico has around 3.5 Million people and 70 Billion in debt. I think we are beginning to see a pattern here for about when the debt load starts to become a real burden. Keep in mind here that debt is over and above all the aid sent by the U.S.

Over a third of the entire population is on food assistance alone and I read reports that state a large percentage of the food assistance money is actually still handled as cash payments down there as well.

Can we say fraud out the waahzoo boys and girls? 

Not only are Puerto Rican bond yields tax free no matter where you live but they also paid out a pretty good percentage so most retirement account vehicles are heavily invested in them.

I smell another bailout coming soon as the Fed will have little choice. Either bail em out or suffer a much sooner pension crisis.

Good thing we are in a recovery isn't it?

I hafta admit a bit of personal bias here. I haven't met many people from Puerto Rico but I can report that I haven't met one yet that didn't end in physical blows being thrown. I even used to have a stalker/troll on this blog a few years back from there. Charming woman let me tell you.

Why I realize blogging about financial matters makes many readers eyes glaze over and click away it is important to at least generally know these things are coming about. With all the possible Financial Black Swans flying around these day's things could fall apart very quickly. I am going to be interested to see how things play out now.

Keep Prepping Everyone!!!




17 comments:

  1. I was watching one of the news channels the other day. I think it was CNN. I don't like CNN but I watch it when FOX is having one of those boring group discussions. At any rate, they wanted to do a series on the economic collapse and abandonment of large sections of many U.S. cities. But none of their reporters wanted to take the risk of going in there. So they finally wound up having the war correspondent do the series and he did not look too happy about it. When you look at parts of Detroit, it looks like the set for a Zombie movie. That's becoming more and more prevalent, no matter what the government says about "the recovery."

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    1. Harry - Did you catch that video from the ambulance crew that was trapped by fire in Detroit a year or so ago? It sounded like a war zone.

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  2. It's obvious to any observant person that the fracture lines are clear, and widening. Politically (the DC crowd, Cali & Colorado voters wanting to secede from their own states, the list goes on and on), financial, taxation, debt burdens, you name it ... it's all coming unglued.

    If you're not already prepared, it's nearly too late. I hope people are watching.

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    1. RP - I agree. I believe it is much closer than any of the establishment types want to admit.

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  3. Now you know why they don't want statehood. All the free money would stop. I worked with a guy who went back after like 15 years for a funeral, and it was still the same nothing had changed.

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    1. Rob - Everyone I have ever met from there cannot stop bad mouthing the U.S. either.

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  4. I know two people from the Welfare Island and both freely admit our country, and pardon the expression, has and is being screwed. I asked about statehood. Their replies, on two separate occasions was, it'll never happen. They have it too good to let us off the hook.

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  5. Sounds like time to grant them independence.

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    1. If only. I remember one of the guys I was in the Army with who was from there saying something about we owed them everything they were getting. I am not sure what his reasoning was because I believe the fight started before we got that far.

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  6. Puerto Rico needs to be cut off, we get nothing from them except headaches.

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    1. I had the feeling that in there culture a boy becomes a man when he fathers a kid. I saw more single moms in Kissimmee then I have anyplace else. The guys are all gang bangers or what I call "Want ta bees" They want to be one or they want to be a bad boy type. My oldest daughter had more P.R. hit on her then whites or blacks combined. All they wanted was sex and make babies.

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    2. Duke - Exactly.

      Rob - The ones I dealt with did exactly that as well. It was constant.

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  7. My husband has to travel the Puerto Rico for business---those folks have the WORST work ethic of any place he's been. LAZY with BAD attitudes, every one of them!!! Now I know WHY. In San Juan, the cops drive around with their lights flashing to give all the drug dealers a heads up that they're coming down the street. Lots of bad cops there, too.

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    1. That explains alot Anon. The ones I knew were always truing to get out of pulling detail of some kind.

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  8. We can complain all we want to about Puerto Rico, but it should be remembered that they did not originally volunteer to become part of the United States. We took the island from the Spanish and insisted on keeping it for (very good) strategic reasons.

    The Puerto Ricans I have met on the Island when I worked there in the 1990s were very nice polite people. They used to have some tax breaks that helped with some of the shipping costs associated with work there. When congress pulled the plug on that, their manufacturing base went away. It probably would have gone away to some extent anyway eventually, but there problems are pretty typical for an area where the job-base has collapsed.

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