Hedgefund Billionaires Are Trying to Murder Puerto Rico

By Molly Gott.

If you’re trying to wrap your head around Puerto Rico’s debt crisis, it isn’t as complicated as Wall Street and Washington are painting it.

Just picture a few Vulture Capitalists circling the island. Now imagine the fear they strike in the people they prey upon below, each time going back for more.

Ordinary Puerto Ricans, people who have worked hard all their lives, are seeing their futures destroyed and their families decimated by a handful of billionaires who troll the globe to gobble up distressed debt of societies crippled by financialization of their economies.

These hedge fund managers are literally known in their industry as “vultures,” for their ruthless approach to investments. Their strategy—which they have used in places including Argentina, Greece, and Detroit—is pretty straightforward: wait for a country to default on its debt, fly in and buy the country’s debt at very cheap prices and then sue the country for full repayment.

It translates to astronomical returns for the funds with enough legal power and time to fight it out with debt-burdened countries. Just this week, vulture billionaire Paul Singer settled with Argentina in a deal that will make him and his firm NML Capital $2.28 billion from Argentina’s principal and interest payments—a 370% return on NML’s original investment of only $617 million. Bracebridge Capital from Boston, another vulture fund that was invested in Argentina, will make an 800% return from the deal.

The less mercy these vulture funds have for a country’s residents– say a cafeteria manager named Canda who had been getting by on her modest $400-a-month pension after 27 years of service to the Camuy public school system – the more they profit.

Last year, her small monthly retirement was cut in half, says Canda’s granddaughter, Yulissa Arce. Both women were featured in Puerto Rico: Pain and Profit, an eye-opening report curated by the Hedge Clippers, released this week with over 30 supporting influential organizations to detail the scope of economic hardships in Puerto Rican communities as an austerity budget kicks into full gear; hedge fund investors have blocked a new path forward to restructure the island’s debt.

Yulissa, an Orlando-based organizer working in communities dotting Central Florida’s I-4 corridor to get out the Puerto Rican vote in this year’s presidential election, further explained her elderly American grandmother’s fixed income was slashed as the price of non-negotiable items – food, medicine, and utilities – spiked.

Weaving stories into new research, the report focuses on the worsening debt crisis to force politicians to take action to end the suffering of these Americans, rather than taking giant contributions from those who are benefiting from their peril.

Like John Paulson, the New York hedgie billionaire, who just this month invited hundreds of financiers to Puerto Rico for the weekend for a conference advertising the island’s “potential to become the Singapore of the Caribbean” — that is, a tax haven and playground for the ultra-wealthy.

How would he or the hedge fund vulture capitalists Leon Black of Apollo Global Management, Mark Brodsky from Aurelius Capital and Andrew Herenstein of Monarch Alternative Capital pull off this experiment?

First, change the tax code. According to The Guardian, some 1,000 ultra-rich financiers, including private equity tycoons Nicholas Prouty and Michael Tennenbaum, have “already taken advantage of the island’s ‘aggressive tax incentive’ laws 20 and 22 that allow Americans to pay zero tax on US income if they spend at least 183 nights on the island.”

Since all those billionaires need a place to hang out for six months, Paulson is conveniently investing $1 billion in luxury real estate in Puerto Rico, including a $260 million buyout of the resort complex La Concha Resort and the Condado Vanderbilt, two neighboring beachfront hotels in San Juan. He is also investing $20 million in the San Juan Beach Hotel, pledging to turn it into an ultra-luxury boutique hotel.

And an entire cottage industry of personal concierge firms are popping up to help the ultra-wealthy find acceptable homes, lawyers, schools, groceries, and doctors, as well as plan weekend trips to places like St. Thomas and St. Barts to serve out their 183 days and nights.

Another part of turning Puerto Rico into one big playground for tax-dodging financiers? Getting rid of the ordinary folk who already live there. In addition to the austerity cuts that are forcing up to 3,000 Puerto Ricans to flee to the mainland every week, the boys in the billionaire’s club are also using campaign contributions to block Congressional efforts to allow Puerto Rico to declare bankruptcy, the Hedge Clippers uncovered.  

Yulissa’s grandmother and the 3 million ordinary Puerto Rican residents left behind face a brutal 45 percent poverty rate with 12.2% unemployment, the highest sales tax in the U.S., and crumbling healthcare, education, and social service systems.

Small wonder Yulissa is seething mad. Her message on the doors in the I-4 corridor: “My family deserves better, and yours does too. We need the Federal Reserve to refinance the debt and we need to get out to the polls and vote out those politicians who are in the pockets of financial interests this election. I don’t need to live in Puerto Rico to help Puerto Rico. We can help now.”

You can too.  #SayNoMás — Use the hashtag, Share the report, Sign this petition, and VOTE.