Category Archives: Hurricanes

Helping in Puerto Rico

From January 28 to February 7th my wife and I were in Vieques, Puerto Rico, helping as best we could with recovery from Hurricane Maria, which hit on September 20th, almost five months ago.  Help is very much still needed. I don’t think I realized how much that is true until I got home to New Jersey and experienced all of the things I didn’t experience during those 10 days:

  • the lights and everything electrical turning on or being on all day and night whenever I need it;
  • a hot, not cold, water shower;
  • not worrying about hitting something or falling when I had to get up and go to the bathroom or move around at night;
  • not hearing (or smelling) loud gas generators behind the house where I was staying and several other places in the neighborhood as day turned into night;
  • not having to do extra-special filtering of the tap water because of concerns about its quality;
  • reliably accessing my cell phone apps, telephone and the internet whenever I want to.

These were the main differences.

I was staying at Casa de Kathy in Esperanza, the second largest town in Vieques. The only street in Esperanza that fully had electrical power when we were there was the Malecon, the downtown street next to the water where bars, restaurants and hotels are, and they didn’t get that power until the fifth day we were there. What electrical power there was elsewhere in town came from gas-powered generators bought by residents who could afford them.

There was concern about the tap water. Neither the EPA nor anyone else had done tests to determine how safe it is to drink.

There were still piles of debris and branches that had been blown down by the storm, as well as collections of stoves and refrigerators disabled by it.

Despite all of these serious problems, the sense I had was that people in general were pulling together, some more than others, to climb out of the hole the hurricane put them in. They were doing so even though there was a lot of criticism of FEMA for its slowness and for it denying aid to a number of people whose homes had been damaged.

I was glad to learn that the use of solar energy, in different forms, is growing, from small solar lights, which are popular, to solar panels on roofs to provide an alternative to an unreliable electric grid.

One of the big takeaways for me was the reinforcement of something I have known intellectually for years, that extreme weather events, like the climate changing which makes them worse and more frequent, hurts low-income people the most. Middle- and upper-class people who have access to financial and other resources had found ways to lessen their suffering or discomfort, like through personal generators. But those without those resources were in a different situation. I heard of at least one family that was sleeping in a tent in their living room because there had been serious damage to their roof that they had not yet been able to afford getting fixed.

The pro-statehood Governor of Puerto Rico, Ricardo Rossello, announced just before we got there that he wanted to privatize that electrical system, currently publicly owned, which would certainly lead to higher electrical rates for many struggling Puerto Rican consumers as the corporate buyer looks to make its profits.

Then there is the relatively large Puerto Rican debt (though hugely smaller than the US debt) of $73 billion. There have been calls for that debt to be forgiven, for obvious reasons. Lin-Manual Miranda, for example, creator and star of the Broadway hit “Hamilton,” called for that in a December opinion piece in the Washington Post. He wrote:

Puerto Rico’s creditors should do the right thing and walk away. It is the only way forward. Anything short of full debt forgiveness would be a brutal form of economic punishment to a people already suffering.

But to add insult to injury, the Republican tax bill passed at the end of 2017, unless challenged and changed, will make things even worse.

A December 20th Washington Post story reported that the Puerto Rican Governor “is calling on lawmakers to rewrite a key part of the tax bill that he says might cause the island’s hefty manufacturing sector to contract, jeopardizing hundreds of thousands of jobs. [It] includes a new 12.5 percent tax on profits derived from intellectual property held by foreign companies — a move designed to compel those companies to move back to the United States. The new tax ‘is a big hit, and Puerto Rico both fiscally and economically is downtrodden, and this is the last thing they need,’ said Federico de Jesus, a former Puerto Rico government official who has been tracking congressional relief efforts for the island.”

US citizens have a special responsibility to help Puerto Rico, which has been a colony of the United States since 1898. It is our humanitarian and moral responsibility, and it is our duty as citizens of the nation which has the power to help Puerto Rico either move forward or backwards after Maria. We must do what we can as far as practical hurricane recovery support but also support groups calling for a cancellation of the debt, changes to the Republican tax bill and reform of the electric power system, not its privatization.

People Act Where US Fails On Climate

WASHINGTON, DC – MARCH 10: Protesters march during a demonstration against the Dakota Access Pipeline on March 10, 2017 in Washington, DC. Thousands of protesters and members of Native nations marched in Washington DC to oppose the construction of the proposed 1,172 Dakota Access Pipeline that runs within a half-mile of the Standing Rock Sioux reservation in North Dakota. (Photo by Justin Sullivan/Getty Images)

The climate crisis is upon us. It seems that every report on climate conditions has one thing in common: things are worse than predicted. The World Meteorological Report from the end of October shows that Greenhouse Gases (GHGs) are rising at a rapid rate and have passed 400 parts per million. According to Dr. Kevin Trenberth of the National Center for Atmospheric Research, “the changes we’re making today are occurring in 100 years, whereas in nature they occur in 10,000 years.”

The United States is experiencing a wide range of climate impacts from major hurricanes in the South to unprecedented numbers of wildfires in the West to crop-destroying drought in the Mid-West. In October, the General Accounting Office reported that the US has spent over $350 billion in the last decade on disaster relief and crop insurance, not counting this year’s hurricanes. These costs will continue and rise.

We are past the time to make a major commitment to the transformation we need to mitigate and adapt to the climate crisis. Imagine the benefits that such a commitment would have in creating a cleaner environment, better health and more jobs and, if structured in a way that is democratized and benefits the public, in ending environmental racism and economic injustice.

Climate talks in Germany

The 23rd session of climate talks is taking place right now in Bonn, Germany. The United States formally withdrew from its commitment to the Paris climate treaty, but delegations of people from the US are in attendance to show their commitment to addressing the climate crisis. A group of organizations, such as and Indigenous Environmental Network, presented their climate platform as “the people’s delegation.” They are calling for a just transition to a fossil-free future and an end to market schemes to offset carbon use.

The people are expressing their demands for more action on the climate in multiple protests around the COP23. Ahead of the climate talks, on Saturday, November 4, tens of thousands of people marched in Bonn to demand an end to fossil fuels. The march kicked off a series of direct actions and alternative events to take place during the talks. On November 8, the one year anniversary of the election of Donald Trump, activists organized a “Climate Genocide” day of action in Bonn and around the world. On Saturday, November 11, thousands marched in Bonn again to protest the use of nuclear energy. The talks conclude on November 17.

The Trump Administration sent a delegation to the climate talks with the goal of protecting the fossil fuel industry. John Cushman of Inside Climate News writes: “The U.S. is straddling a climate credibility gap, with the Trump administration’s policies on one side of an abyss and what the government’s own scientists know about climate change with increasing certainty on the other.”

100% renewable energy is necessary and possible

If there is to be any possibility of mitigating the climate crisis, then action must be taken immediately to end the use of dirty energy, otherwise lower carbon emissions and sequester carbon. While some are saying that we have 18 years before we hit the limits of our “carbon budget,” scientists Stephen Davis and Robert Socolow report that when all sources of carbon and carbon commitments are taken into account, we will hit the limit in 2018.

Organizations and government agencies have pointed out that the Paris climate treaty goals are not enough to mitigate the climate crisis. On Tuesday, the United Nations Environment Program released a report calling for faster and more rapid cuts in emissions than are outlined in the treaty. This can be achieved by closing coal plants and moving to renewable sources, improving energy efficiency, protecting and planting more forests and changing agricultural practices to sequester carbon in soil.

The good news is that it is possible to reduce carbon quickly, and it will lower energy costs, improve health and create jobs. A study released at the COP23 shows that we can move to zero carbon energy worldwide by 2050. This would be largely based on solar energy with additional energy from wind, water and a small percentage from biomass, although biomass is not considered to be a sustainable source of energy.

David Schwartzman reminds us that although we have the knowledge and resources to move quickly to 100% renewable energy, two major obstacles are the Military Industrial Complex and capitalism. He writes: “All is contingent on the growing strength of multi-dimensional, transnational class struggle, [and] on the convergence of movements for climate, energy, environmental justice and for peace and demilitarization.”

Reaching our goal

Just as is necessary for other struggles, achieving our goals of mitigating the climate crisis in a way that is sustainable and equitable will require the dual track approach of resistance and constructive programs. There are signs that this work is being done in the North America.

Resistance to new fossil fuel infrastructure is working. This summer, Enbridge stopped its North East Direct gas pipeline project in New England. This fall, TransCanada withdrew its Energy East Pipeline project, which would have transported “1.1 million barrels of oil per day from Alberta, Saskatchewan and North Dakota across the country through a 4,500-kilometre route that would end at a terminal in Saint John, New Brunswick.”

There is strong opposition to pipelines throughout the United States, from the ongoing fight against the Dakota Access Pipeline to the Bayou Pipeline to multiple pipelines in MichiganPennsylvania, Maryland and West Virginia, Virginia and North Carolina. And efforts continue to stop the first fracked gas refinery and export terminal on the East Coast as it nears completion. The terminal being built by Virginia-based Dominion Energy in the Cove Point neighborhood of Maryland (the first to be built in such a densely-populated area) will drive fracking in the Utica and Marcellus shales and raise gas prices in the US.

Pipeline companies report that their biggest problem is opposition to their projects. It should come as no surprise that the industry is fighting back. This was very obvious in the #NoDAPL protests at Standing Rock. Chase Iron Eyes, who is being prosecuted for inciting a riot against the Dakota Access Pipeline, will be using a necessity defense to demonstrate that he was acting out of necessity to protect water his family relies on.

This week, pipeline protesters in Massachusetts were met with police dogs and stun guns. Mark Hand recently discovered that the industry is “in the ‘early stages’ of putting together a campaign to counter opposition to fracking and pipelines,” including creating grassroots groups.

Some communities are protecting themselves by banning projects. South Portland, Maine has spent over $1 million to defend its pipeline ban. Ohio activists recently won a court victory allowing them to vote on local fracking bans. Others are taking on the banks that fund the projects. On Monday, more than 200 people painted a giant mural on the street in front of Wells Fargo, creating an effective street blockade in the process.

Food is a large contributor to carbon emissions through animal cultivation for meat, destroying forests for crops and transportation of food over long distances. The UN urged this week that we move to a meat-free and dairy-free diet for the climate (and it would also be good for our health).

Our food system could contribute to the solution. Organic farming practices can sequester large amounts of carbon in the soil. On top of that, the large food co-operative, Organic Valley, announced this week that it is committed to using 100% renewable energy by 2019, starting with community solar projects. Rooftop solar is “creating well-paying jobs at a rate that’s 17 times faster than the total U.S. economy.”

manipadma2-2-640x381 (1)Our climate imperative

If we are to have a livable future, we must act rapidly. Failure to act will have devastating impacts. Studies suggest that there may be as many as one billion climate refugees by 2050. Climate change is contributing to migration into cities and poverty, causing food insecurity. People in North America are not immune to this, as recent hurricanes, wildfires and droughts reveal.

The climate crisis is also bad for our health and will cause an additional 250,000 deaths per year.  In addition to direct effects, such as heat stroke, injuries from catastrophes and longer allergy seasons and mental health impacts from stress, the climate crisis is also increasing vector-borne diseases.

Every crisis offers an opportunity for radical positive transformation. As we act to address the climate crisis, let’s do it in ways that change systems so they are equitable, just and non-discriminatory. Our actions to mitigate and adapt to climate change can work to democratize the economy through cooperatives, energy creation by individuals on their rooftops and land, public banks and gift economies, to improve our health through clean water, air, organic foods and low cost public transit, and to bring peace to the world by ending US imperialism.

It can be so, if we act with intention to make it that way.

Will Hurricane Maria Wash Away all Illusions about the U.S. in Puerto Rico?

Francis Fox Piven and Richard Cloward identified and emphasized an important factor in understanding the larger political and economic forces that create the conditions in which people defy the rules of the established order and take part in popular protest.1 These moments of popular protect was during the Great Depression in the 1930s, when unemployment was at about one-third for the working population in the U.S., and during the 1950s and 1960 when unemployment reached depression levels for Blacks, living in segregated ghettos. For Piven and Cloward, it was the removal of employment and the disintegration of community that resulted in uprooting people from a sense of stability that comes from the routine of work. It is in these moments of catastrophic suffering that individuals find it difficult to blame themselves or God for the plight they found themselves in.2

In the case of Puerto Rico, will Hurricane Maria have a similar effect? Will the removal of stability (which was always precarious) among the many poor and displaced in Puerto Rico force Puerto Ricans to confront the illusion that the conditions on the island are not their individual or collective faults, but the results of the U.S. colonial relationship? Hurricane Maria appears to be a part of the storm that has ravaged Puerto Rico since 1898.

Even before Hurricane Maria reached Puerto Rico, it had depression-like economic conditions with high unemployment and a poverty rate estimated to be at 43.5% in 2016.3 Recent figures had the “official” unemployment rate at around 10.1% in August 2017 (17% in 2010 was the highest since 2007).4 According to a Pew Research Center report, more Puerto Ricans have left the island for the U.S. this decade than during the largest recorded numbers during the Great Migration after World War II, citing job-related reasons above all others.5 Immigration to the U.S. has historically been seen as a safety-valve, reducing the social pressure and conflict associated with high unemployment.

A very important statistic is the percentage of Puerto Ricans in the labor force. According to the U.S. Census 2011-2015, only 43% of Puerto Ricans aged 16 and older are in the labor force (compared to the U.S., which is 63.3%). It is difficult to arrive at actual figures of the plight of Puerto Ricans in Puerto Rico when one considers all the discouraged workers who exist below the official radars of U.S. quantitative statistical methods. Many appear to either manage to scrape by, participate in the underground economy, or move to the United States. For example, the number of Puerto Ricans in the U.S. reached a record 4.9 million in 2012, and since, at least 2006, has exceeded the 3.5 Puerto Ricans on the island.

On his visit to Puerto Rico, Trump said, “I hate to tell you, Puerto Rico, but you’ve thrown our budget a little out of whack because we’ve spent a lot of money on Puerto Rico.” While this may have been an attempt at humor, it actually reveals the U.S. government’s official policy on Puerto Rico, regardless if a Republican or a Democrat is at the head of the executive office. The idea that economic conditions are self-inflicted is not only consistent with “blaming the victim,” but is also part of the “myth of underdevelopment.”6 The myth of underdevelopment illustrates how imperialist nations enrich themselves through the extraction of resources, enslavement, exploitation of labor, the development of captive markets, and debt domination as a result of ownership and control of industry and trade and then turn around and treat a colony or neo-colony’s actions as the source of its impoverishment.

Puerto Rico has experienced one of the worst hurricanes in its history. Most of the 3.5 million Puerto Ricans remain without electricity, drinking water, food, fuel, vital medicines, and a devastated infrastructure. The Trump administration’s response has been slow and ineffective, leaving Puerto Rico in a dire life and death situation. However, the history of Puerto Rico has been a history of economic crisis that long preceded the hurricane or the well-publicized 72 billion dollar debt owed to Wall Street. We are told that Puerto Rico has mismanaged “its” economy and that it is a “welfare basket case,” leeching off of U.S. tax payers’ money. But what is missing in this “official” U.S. narrative is that Puerto Rico has been the location of wealth development. This wealth development has certainly not been equal. U.S. corporations have received the lion’s share of it along with a Puerto Rican elite that has seen fit to ensure that Puerto Rico’s resources remain in the control of the U.S. and that it remains a captive market for U.S. goods.

The Puerto Rico as a captive market of the U.S. was established by the U.S. Foraker Act of 1900. The Foraker act placed all trade between Puerto Rico and other countries under U.S. taxation and protective tariffs, which protect U.S. products from foreign competition.  As a result, Puerto Ricans are forced to buy all of its imported goods from the U.S., thus becoming a captive market. In addition, the Merchant Marine Act of 1920 stipulates that all goods transported by water between U.S. ports be carried on U.S. flag ships to Puerto Rico.7 As a result, Puerto Ricans pay up to 20% more for goods sold on the island, increasing the profit margins for U.S. produced goods and shipped items.

As long as Puerto Rico (and not just the selected elite) is not in a position to negotiate the terms of its development, trade, and have the capacity to regulate and tax foreign investment (includes the U.S.), Puerto Rico will remain in the clutches of U.S. dependency.  For example, in 1947, Operation Bootstrap, a U.S. driven economic development project meant to industrialize and combat poverty in Puerto Rico by attracting U.S. owned manufacturing companies, with tax exemptions, subsidies to factories, and loan assistance was a godsend to U.S. corporations because of the unlimited pools of low-paid labor and all the profits amassed without the benefit of paying taxes to the island or investing in its development. In order to address the poverty that this program accelerated, the Popular Democratic Party (PPD), encouraged Puerto Rican immigration to the U.S. by subsidizing airfare. In addition, other forms of population control was used to combat poverty such as a governmental sponsored sterilization program. Yet, in that period, U.S. corporations continued to take huge profits off the island, while billions in federal welfare and transfer payments come to the Puerto Rican yearly to alleviate poverty.8

In 1976, the U.S. Congress passed Section 936, in the U.S. Tax Code, with the goal of encouraging business investment in Puerto Rico.  While several corporations, primarily pharmaceutical corporations, took advantage of the federal tax exemptions and made millions, Section 936 did not deliver on its promise of jobs or increases of wages because capital-intensive labor requires less employees. Nevertheless, the continued problem was that U.S. corporations did not invest the profits in Puerto Rico; instead most of them accumulated their profits until the end of the tax exemption period (10 years) and then liquidated their profits into other subsidiary companies outside of Puerto Rico.9 In fact, because of the loss of billions of dollars in taxes to the U.S. federal government, Section 936 was phased out of existence in 2006.  Some have pointed to the removal of Section 936 as causal to the current economic crisis, but a careful review of this law reads more like the legal corruption that pervades Washington and corporate interests, and not a viable and sustainable economic policy with Puerto Rican interests in mind.

For many Puerto Ricans, the promise of America did not pan out. Nelson Denis observed:

After one hundred years of citizenship [the Jones Act], the per capita income of Puerto Ricans is roughly $15,200—half that of Mississippi, the poorest state in the union. Yet in the last five years alone, the government raised the retirement age, increased worker contributions, and lowered public pensions and benefits. It also hiked the water rates by 60 percent, raised the gasoline and sales taxes (the latter to 11.5 percent), and allowed electricity rates to skyrocket. In 2013–14 alone, 105 different taxes were raised in Puerto Rico.10

The nefarious circumstances that surround the Jones Act of 1917 are clear and illustrate the motives of the United States. According to Johnson, “Congressional hearings in 1916 had indicated that many Puerto Ricans preferred to be Puerto Rican citizens” as opposed to U.S. citizens.11 In the period of World War I, Lewis wrote: “…America felt obliged to prove her liberalism as against imperial Germany…”12 In addition, Cripps argued that with the outbreak of World War I, the U.S. wanted to secure Puerto Ricans more firmly to the U.S. as well as curb the growing discontent toward the United States.13 Lastly, Denis argues that U.S. citizenship wasn’t exactly a gift, because one month later the U.S. declared war on Germany and needed more able bodies for the war effort in World War I.10

Puerto Rico’s elite and political process grew out of colonial context. The political process has historically operated within the sphere of external control and it is within these constraints that Puerto Rico’s political parties operate. The political process provides the island’s elite and their political parties an arena in which to exercise their limited power within the perimeters of U.S. power. For example, Luis Munoz Marin and the PPD came to power in the 1930s during political and economic strife. Munoz Marin was the Roosevelt New Deal administration’s man in Puerto Rico and he and the PPD would serve as an intermediary force between the U.S. and the Puerto Rican people, delivering the “goods,” short circuiting the tension on the island, while elevating their own political and economic interests in keeping the colony afloat.14

The creation of the “commonwealth” in 1952 or what is referred to as the Estado Libre Asociado in Puerto Rico was designed to shield against international criticism of its continued colonial status. This in turn provided the opportunity to manufacture the necessary consent to “legitimize” the political arrangement by providing the appearance of the expressed political will of Puerto Ricans. The creation of commonwealth status was used as a ploy to convince the U.N. that Puerto Rico was no longer a colony. As a result, in 1953, Puerto Rico was removed from the U.N.’s list of non-self-governing territories that required decolonization. This maneuver made the U.S. exempt from submitting annual reports on the country’s social and economic conditions to the U.N. Secretary General. Since 1953, the U.S. has refused any inquiry into Puerto Rico’s political status stating that all Puerto Rican matters are within the purview of the U.S. and it is considered an internal matter. As we will see below, the U.S. colonial relationship with the U.N. is at the core of this matter and cannot be resolved as an internal matter, but requires international attention and intervention in the form of establishing a process for decolonization.

The management of a colony by the use of a U.S. state strategy of elite promotion of the PPD and its employment distribution and social aid provisions failed miserably by the 1960s and the 1970s as the U.S. was hit with an economic crisis and moved more in the direction of neoliberalism amid growing competition from Japan and Western Europe. The period that preceded the crisis was characterized by what Morales Carrion called the “political consensus,” because it involved the PPD’s ability to deliver employment and improvements to the standard of living.15 This crisis also provided opportunity for the New Progressive Party (PNP), a new pro-statehood political party, to emerge.  They won their first governor’s election during political and economic uncertainty in 1968. They attempted to appeal to the poor with such slogans as “Statehood is for the Poor” as they attacked the PPD for being responsible for Puerto Rico’s state of dependency. The PNP program is that as a state, Puerto Ricans would have access to the services, rights, and protections that other U.S. states have. Critics have stated that statehood would bring about the death of a Puerto Rican nation; its unique culture, identity, and whatever autonomy it claims and aspires to possess.

The pro-statehood party has received little to no support in the U.S. Congress and if and when this is to happen it would more than likely occur when Puerto Rico has been depopulated of almost all Puerto Ricans, especially the poor, which is occurring now (as noted above). On the other hand, the PPD’s model as an intermediary force embedded in the New Deal politics of managing marginality has ran its course, because of  the U.S.’s declining global economic position and its increasing reliance on neoliberal policies. It is clear that the U.S. and Puerto Rico do not have mutual interests. It is also clear that the U.S. continues to maintain sovereignty over Puerto Rico and as long as it can maintain a captive market, rent free military bases, an endless pool of labor rendered superfluous due to globalization and its race to the bottom, and bodies to fill the rank-and-file of the war machine, it has no desire to change this fortuitous situation, only the desire to keep a lid on a potential explosive situation.

Puerto Ricans now must confront a grim reality that the U.S. government does not care about them and has not since 1898. This reality is not the result of the Trump administration. After all, the establishment of PROMESA, came under the Obama administration, which announced loudly and forcefully that Puerto Ricans do not have any national sovereignty or rights, because this board, which comprises of Wall Street interests has dictatorial powers, having control over Puerto Rico’s budget, laws, financial plans (allocation), and regulations, and is not accountable to Puerto Ricans.16 It is very important to point out that the U.S. government, no matter the political party at the head of the executive office, has never prioritized a resolution of Puerto Rico’s colonial status. It is also important to understand that political parties in Puerto Rico are not mere puppets of the U.S. or its party duopoly, but are active participants in sustaining their own positions of power by cooperating closely with the U.S.’ Democratic or Republican Parties.

Will Hurricane Maria wash away all illusions about the U.S. in Puerto Rico? The hurricane winds of Maria appear to be blowing the roof right off of the many years of concealment and containment of the fact that Puerto Rico is but a colony of the U.S., with second rate citizenship and as Trump stated, “on an island in the middle of the ocean.”

The last two times in which large segments of the Puerto Rican population became aware that their collective suffering was the byproduct of larger structures and processes and not the result of either individual attributes or some deficiency in their ability to self-govern was in the 1930s, when the Nationalist Party and organized labor mobilized and in the 1960s and 1970s when Puerto Rico was hit with an economic crisis, which propelled mobilizations of labor, students, and the reemergence of the pro-independence movement. In these two historic moments, the U.S. state and the elites on the island had the use of the carrot (a system of rewards in return for compliancy) and the stick (a huge repressive and surveillance apparatus on the island). However, today, there appears to be less and less carrot (the New Deal strategy), but plenty of stick.

The stick can be summed up by examining the repressive and surveillance apparatus on the island. The U.S. military presence on the island has varied according to the U.S. geopolitical strategy at any given time. At its peak, there were 50 military bases with the largest being the former Roosevelt Roads Naval Station. In the 1980s, these military bases had approximately 10,243 full-time active military and civilian personnel stationed on them.17

The U.S. National Guard, currently maintains 48 armories and are in 30 communities. The Guard in Puerto Rico is estimated at being about 8,000 to 10,000 strong. In addition to the Guard and the unknown military strength of other branches on the island, there are FBI, DEA, CIA, Homeland Security, the Coast Guard, and private contractors who are not only involved in drug interdiction and counterinsurgency operations in the Caribbean and Latin American, but are active in Puerto Rico.18

This military presence on the island has historically served as a constant reminder and deterrent to resistance: a show of U.S. military strength as compared to Puerto Rican’s military weakness. These forces have been active in putting down rebellion and engaging in counterinsurgency types of operations in the 1930s and 1950s that targeted the Nationalist Party, a pro-independence organization. Also in the 1960-1980 period, the FBI’s COINTELPRO was active in a campaign to disrupt the pro-independence organizational efforts that included labor leaders and students on the island and in the United States. For example, in 1985, 200 FBI agents raided Puerto Rican activists’ houses and businesses throughout the island in an attempt to intimidate supporters of independence while they arrested people alleged to be connected to the Los Macheteros.19

It was discovered in 1987 that the FBI and the local police had “subversive” dossiers on about 75,000 Puerto Ricans deemed to be threats. These dossiers go back to the early days of the U.S. occupation and not only on included members of pro-independence supporters, but also included large sections of the Puerto Rican population.20 These brief examples point to how a movement for national independence has been historically repressed and criminalized; they also reveal the lunacy in the reasoning that Puerto Ricans have somehow expressed their free will under such oppressive conditions.

Will the disasters, natural or otherwise, create the conditions for a people to look beyond the U.S.’ set parameters of thought and alternatives and look at larger political and economic conditions that Puerto Rico finds itself? This is not a case of restructuring or forgiving the debt or allocating more provisions to Puerto Rico, but the case of colonialism.  A cursory study of Puerto Rico’s history illustrates that remedies to the “economic problem” in Puerto Rico have consistently overwhelming benefited the U.S. at the cost of Puerto Ricans.

The Trump administration’s response to Hurricane Maria on the island and its disparaging views of Puerto Rico may end up being a watershed moment for Puerto Ricans because it reveals the real commitment and position of the U.S. on Puerto Rico.  The effects of Hurricane Maria and the austerity measures (e.g., closed schools and hospitals, and cuts to government employment) may, in fact, begin a major drift towards decolonization as the current reality on the island becomes more and more evident to the common Puerto Rican.

  1. Frances Fox Piven and Richard A. Cloward. 1979 [1977]. Poor People’s Movement. New York, NY: Vintage Books.
  2. Ibid., 11-12.
  3. QuickFacts: Puerto Rico. U.S Census Bureau. 2016. Retrieved October 1, 2017.
  4. Economy at a Glance: Puerto Rico. Bureau of Labor Statistic, United States Department of Labor, October 13, 2017. Received: October 13, 2017.
  5. See Cohn, D’Vera, Patten, Eileen, and Lopez, Mark Hugo. 2014. “Puerto Rican Population Declines on Island, Grows on U.S. Mainland.” Pew Research Center, Hispanic Trends. Retrieved October 4, 2017.
  6. See Michael Parenti. 1995. Against Empire. San Francisco, CA: City Lights Books.
  7. See Nelson Denis. 2017. “After a Century of American Citizenship, Puerto Ricans Have Little to Show for It.” The Nation, March 2, 2017.  Retrieved June 5, 2017.
  8. See Juan Gonzalez. 2000. Harvest of Empire. New York, NY: Penguin Books, p. 251.
  9. James L Dietz. 1986. Economic History of Puerto Rico: Institutional Change and Capitalist and Capitalist Development. Princeton, NJ: Princeton University Press, p. 301.
  10. Nelson Denis. 2017. “After a Century of American Citizenship, Puerto Ricans Have Little to Show for It.” The Nation, March 2, 2017. Retrieved June 5, 2017.
  11. Roberta Ann, Johnson. 1980. Puerto Rico: Commonwealth or Colony? New York, NY: Praeger, p. 17.
  12. Gordon K. Lewis. 1963. Puerto Rico: Freedom and Power in the Caribbean. New York, NY: Haper Torchbooks, p. 3.
  13. L. L. Cripps. 1982. Human Rights in a United States Colony. Cambridge, MA.: Schenkman Publishing Company, Inc., p. 23.
  14. Vince Montes. 2003. Cycles of Protest: Contentious Puerto Rican Collective Action, 1960s-1980s. Unpublished dissertation, New School for Social Research.
  15. Arturo Morales Carrion. 1983. Puerto Rico: A Political and Cultural History. New York, NY: W.W. Norton & Company, Inc., p. 143.
  16. Patricia Guadalupe. 2016. “Here’s How PROMESA Aims to Tackle Puerto Rico’s Debt.” ABC News, June 30. Retrieved June 12, 2017.
  17. Humberto Garcia Munoz. 1993. “U.S. Military Installations in Puerto Rico: Controlling the Caribbean.” Pp. 53-66 in Critical Perspectives on Contemporary Puerto Rico, edited by Edwin Melendez, and Edgardo Melendez. Boston, Mass.: South End Press, p. 57.
  18. Vince Montes. 2009. “The Web Approach to the State Strategy in Puerto Rico.” Pp. 99-118 in Bureaucratic Culture and Escalating Problems: Advancing the Sociological Imagination, edited by D. Knottnerus and B. Phillips. Boulder, CO: Paradigm Publishers.
  19. Ronald Fernandez. 1996. The Disenchanted Island: Puerto Rico and the United States in the Twentieth Century. Westpoint, CT: Praeger Publishers, p. 246-247.
  20. Ramon Bosque-Perez. 2005. “Political Persecution against Puerto Rican Anti-Colonial Activities in the 20th Century.” Pp. 13-48 in Puerto Rico under Colonial Rule, edited by Ramon Bosque-Perez and Jose Javier Colon-Morera. Albany, NY: SUNY Press, p. 24.

How to Wipe Out Puerto Rico’s Debt Without Hurting Bondholders

During his visit to hurricane-stricken Puerto Rico, President Donald Trump shocked the bond market when he told Geraldo Rivera of Fox News that he was going to wipe out the island’s bond debt. He said on October 3rd:

You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.

How did the president plan to pull this off? Pam Martens and Russ Martens, writing in Wall Street on Parade, note that the U.S. municipal bond market holds $3.8 trillion in debt, and it is not just owned by Wall Street banks. Mom and pop retail investors are exposed to billions of dollars of potential losses through their holdings of Puerto Rican municipal bonds, either directly or in mutual funds. Wiping out Puerto Rico’s debt, they warned, could undermine confidence in the municipal bond market, causing bond interest rates to rise, imposing an additional burden on already-struggling states and municipalities across the country.

True, but the president was just pointing out the obvious. As economist Michael Hudson says, “Debts that can’t be paid won’t be paid.” Puerto Rico is bankrupt, its economy destroyed. In fact, it is currently in bankruptcy proceedings with its creditors. Which suggests it’s time for some more out-of-the-box thinking . . . .

Turning Disaster into a Win-Win

In July 2016, a solution to this conundrum was suggested by the notorious Goldman Sachs itself, when mom and pop investors holding the bonds of bankrupt Italian banks were in jeopardy. Imposing losses on retail bondholders had proven to be politically toxic, after one man committed suicide. Some other solution had to be found.

Italy’s non-performing loans (NPLs) then stood at €210bn, at a time when the ECB was buying €120bn per year of outstanding Italian government bonds as part of its QE program. The July 2016 Financial Times quoted Goldman’s Francesco Garzarelli, who said, “by the time QE is over – not sooner than end 2017, on our baseline scenario – around a fifth of Italy’s public debt will be sitting on the Bank of Italy’s balance sheet.”

His solution: rather than buying Italian government bonds in its quantitative easing program, the European Central Bank could simply buy the insolvent banks’ NPLs. Bringing the entire net stock of bad loans onto the government’s balance sheet, he said, would be equivalent to just nine months’ worth of Italian government bond purchases by the ECB.

Puerto Rico’s debt is only $73 billion, one third the Italian debt. The Fed has stopped its quantitative easing program, but in its last round (called “QE3”), it was buying $85 billion per month in securities. At that rate, it would have to fire up the digital printing presses for only one additional month to rescue the suffering Puerto Ricans without hurting bondholders at all. It could then just leave the bonds on its books, declaring a moratorium at least until Puerto Rico got back on its feet, and better yet, indefinitely.

According to the Bureau of Labor Statistics jobs data, 33,000 US jobs were lost in September, the first time the country has had a negative figure since 2010. It could be time for a bit more economic stimulus from the Fed.

Successful Precedent

Shifting the debt burden of bankrupt institutions onto the books of the central bank is not a new or radical idea. UK Prof. Richard Werner, who invented the term “quantitative easing” when he was advising the Japanese in the 1990s, says there is ample precedent for it. In 2012, he proposed a similar solution to the European banking crisis, citing three successful historical examples.

One was in Britain in 1914, when the British banking sector collapsed after the government declared war on Germany. This was not a good time for a banking crisis, so the Bank of England simply bought the banks’ NPLs. “There was no credit crunch,” wrote Werner, “and no recession. The problem was solved at zero cost to the tax payer.”

For a second example, he cited the Japanese banking crisis of 1945. The banks had totally collapsed, with NPLs that amounted to virtually 100 percent of their assets:

But in 1945 the Bank of Japan had no interest in creating a banking crisis and a credit crunch recession. Instead it wanted to ensure that bank credit would flow again, delivering economic growth. So the Bank of Japan bought the non-performing assets from the banks – not at market value (close to zero), but significantly above market value.

Werner’s third example was the US Federal Reserve’s quantitative easing program, in which it bought $1.7 trillion in mortgage-backed securities from the banks. These securities were widely understood to be “toxic” – Wall Street’s own burden of NPLs. Again the move worked: the banks did not collapse, the economy got back on its feet, and the much-feared inflation did not result.

In each of these cases, he wrote:

The operations were a complete success. No inflation resulted. The currency did not weaken. Despite massive non-performing assets wiping out the solvency and equity of the banking sector, the banks’ health was quickly restored. In the UK and Japanese case, bank credit started to recover quickly, so that there was virtually no recession at all as a result.

The Moral Hazard Question

One objection to this approach is the risk of “moral hazard”: lenders who know they will be rescued from their bad loans will recklessly make even more. That is the argument, but an analysis of data in China, where NPLs are now a significant problem, has relieved those concerns. China’s NPLs are largely being left on the banks’ books without writing them down. The concern is that shrinking the banks’ balance sheets in an economy that is already slowing will reduce their ability to create credit, further slowing growth and triggering a downward economic spiral. As for the moral hazard problem, when researchers analyzed the data, they found that the level of Chinese NPLs did not affect loan creation, in small or large banks.

But if Puerto Rico got relief from the Fed, wouldn’t cities and states struggling with their own debt burdens want it too? Perhaps, but that bar could be set in bankruptcy court. Few cities or states can match the devastation of Puerto Rico, which was already in bankruptcy court when struck by hurricanes that left virtually no tree unscathed and literally flattened the territory.

Arguably, the Fed should be making nearly-interest-free loans to cities and states, allowing them to rebuild their crumbling infrastructure at reasonable cost. That argument was made in an October 2012 editorial in The New York Times titled “Getting More Bang for the Fed’s Buck”. It was also suggested by Martin Hutchinson in Reuters in October 2010:

An alternative mechanism could be an extension of the Fed’s [QE] asset purchases to include state and municipal bonds. Currently the central bank does not have the power to do this for maturities of more than six months. But an approving Congress could remove that hurdle at a stroke . . . .

The Fed lent $29 trillion to Wall Street banks virtually interest-free. It could do the same for local governments.

Where There’s a Will

When central banks want to save bankrupt institutions without cost to the government or the people, they obviously know how to do it. It is a matter of boldness and political will, something that may be lacking in our central bankers but has been amply demonstrated in our president.

If the Fed resists the QE alternative, here is another possibility: Congress can audit the Department of Housing and Urban Development and the Department of Defense, and retrieve some of the $21 trillion gone missing from their accountings. This massive black money hole, tracked by Dr. Mark Skidmore and Catherine Austin Fitts, former assistant secretary of HUD, is buried on the agencies’ books as “undocumented adjustments” – entries inserted without receipts or other documentary support just to balance the books. It represents money that rightfully belongs to the American people.

If our legislators and central bankers can find trillions of dollars to bail out Wall Street banks, while overlooking trillions more lost to the DoD and HUD in “undocumented adjustments,” they can find the money to help an American territory suffering the worst humanitarian crisis in its history.