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Puerto Rico defaults for 1st time ever; is ‘death spiral’ next?

by on Aug.03, 2015, under News Events

© Alvin Baez
The Commonwealth of Puerto Rico is now in default for the first time in history after it only paid $628,000 of a $58 million debt payment it owed over the weekend.

According to the Government Development Bank for Puerto Rico (GDB), the commonwealth simply did not have the cash to make the bond payment owed to the Public Finance Corporation (PFC). Puerto Rico is currently some $72 billion in debt.

“Due to the lack of appropriated funds for this fiscal year the entirety of the PFC payment was not made today (the first business day after the Saturday deadline),” GDB President Melba Acosta-Febo said in a statement.

READ MORE: Debt-ridden Puerto Rico fails in bid for municipal bankruptcy rights

“This was a decision that reflects the serious concerns about the Commonwealth’s liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the essential services they deserve are maintained.”

As a result of the tiny payment, the credit rating agency Moody’s said that Puerto Rico has defaulted on its debts.

“Moody’s views this event as a default,” Emily Raimes, vice president at Moody’s Investors Service, said in a statement toCNBC. “Debt service on these bonds is subject to appropriation, and the lack of appropriation means there is not a legal requirement to pay the debt, nor any legal recourse for bondholders.”

Raimes added that it does not believe the island has enough cash to make all the payments it needs do, and that similar news is on the way.

“This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments,” she said. “This is a first in what we believe will be broad defaults on commonwealth debt.”

According to CNN, Puerto Rico owed a monthly debt payment of $483 million. The vast majority of that was actually paid except for the $58 million owed to PFC, something the outlet described as a strategic decision since that debt is owned by credit unions and Puerto Ricans – mainly retirees – who don’t have much of a chance to battle the move in the courts.

READ MORE: ​No federal bailout for Puerto Rico – White House

The next step in the process could involve Puerto Rico and the PFC getting together to negotiate some kind of restructuring plan. It’s possible that such a plan will push the island’s government to back austerity by raising taxes and lowering spending.

In June, Puerto Rico Governor Alejandro Garcia Padilla said the commonwealth cannot pay its debt and warned that a “death spiral” could occur if restructuring wasn’t possible.

“There is no other option. I would love to have an easier option. This is not politics, this is math,” Garcia said at the time. “My administration is doing everything not to default … But we have to make the economy grow. If not, we will be in a death spiral.”

The White House has already ruled out providing the commonwealth with a bailout, and since the island is not a municipality of a state, it does not qualify for bankruptcy. The Obama administration said it would ask Congress to look into the possibility of allowing Puerto Rico to do so, but it’s unclear how lawmakers will act in response to the situation.

“There’s no one in the administration or in DC that’s contemplating a federal bailout of Puerto Rico,” White House spokesman Josh Earnest said in June. “But we do remain committed to working with Puerto Rico and their leaders as they address the serious challenges.”

Puerto Rico’s problems run the gamut from a heavily damaging, decade-long recession and high unemployment to government mismanagement and excess spending. Between 2010 and 2013, some 48,000 people left Puerto Rico to find jobs in the US mainland every year.

One resident, 26-year-old Omar Rodriguez, just recently left with his family and moved to Austin, Texas, where both he and his wife obtained jobs.

“I wouldn’t imagine having the same quality of life in Puerto Rico at the moment and that saddens me,” Rodriguez said to CNN. “Saying goodbye to my parents …it was a bit unbearable.”

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Obama: G7 to discuss ‘Russian aggression in Ukraine’

by on Jun.07, 2015, under News Events

Obama: G7 to discuss ‘Russian aggression in Ukraine’

9 hours ago

President Obama has said the leaders of the G7 nations will discuss “standing up to Russian aggression in Ukraine”.

Speaking at a news conference in Bavaria with the German Chancellor, Angela Merkel, he also joked that he had forgotten his lederhosen.

He said the two-day summit would discuss a range of issues including the global economy, violent extremism and climate change.

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Texas Judge Rules Schools Can Force RFID Chips on Students

by on Jan.10, 2013, under News Events

AP

In the fall of last year the San Antonio Northside School District in Texas announced that they would track students with RFID (radio frequency identification) chips in their student badges.

One student, sophomore Andrea Hernandez, was suspended for refusing to wear the tracking device and took the matter to court.

Texas Judge Rules Schools Can Force RFID Chips on Students

 

On Tuesday, U.S. District Judge Orlando Garcia ruled in favor of the school district claiming they have the right to expel Hernandez for refusing to abide by school requirements. By default the judge ruled that the school had the right to force children to be treated like cattle while on campus.

The program, called the “Student Locator Project,” is aimed at increasing student attendance rates presumably to boost in public funding for the district.

“There is something fundamentally disturbing about this school district’s insistence on steamrolling students into complying with programs that have nothing whatsoever to do with academic priorities and everything to do with fattening school coffers,” said John Whitehead of the Rutherford Institute when he took the case.

As part of the pilot program, roughly 4,200 students at Jay High School and Jones Middle School are being required to wear “SmartID” card badges embedded with an RFID tracking chip which will make it possible for school officials to track students’ whereabouts on campus at all times. School officials hope that by expanding the program to the district’s 112 schools, they can secure up to $1.7 million in funding from the state government. (Source)

The Hernandez family argued that the RFID badges violated their daughter’s privacy rights and referred to them as the “Mark of the Beast“, a reference to a warning in the Book of Revelations.

The primary defense was not to challenge the obvious privacy issues involved with the badges, but to seek a religious exemption. The judge ruled that the badge is “not grounded in her religious beliefs” and is a “secular choice rather than a religious concern.”

“The Supreme Court has made clear that government officials may not scrutinize or question the validity of an individual’s religious beliefs,” said John W. Whitehead, president of The Rutherford Institute, in a statement.

“By declaring Andrea Hernandez’s objections to be a secular choice and not grounded in her religious beliefs, the district court is placing itself as an arbiter of what is and is not religious. This is simply not permissible under our constitutional scheme, and we plan to appeal this immediately,” he added.

The court originally agreed to block the suspension to hear the case, but would not extend that request for the appeal process.

“In coming to Andrea’s defense, Rutherford attorneys have alleged that the school’s attempts to penalize, discriminate and retaliate against Andrea violate her rights under Texas’ Religious Freedom Act and the First and Fourteenth Amendments to the U.S. Constitution,” said Rutherford’s lawyers.

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Iran warns Patriot missiles in Turkey could lead to ‘World War III’

by on Dec.17, 2012, under News Events

Iranian armed forces chief joins other Islamic Republic officials who caution that the stationing of NATO missiles could cause conflict in the Middle East and elsewhere.

The planned deployment of NATO Patriot missiles along Turkey’s border with Syria could lead to a “world war” that would threaten Europe as well, Iran’s military chief of staff was quoted as saying on Saturday.

Turkey asked NATO for the Patriot system, designed to intercept aircraft or missiles, in November to help bolster its border security after repeated episodes of gunfire from war-torn Syria spilling into Turkish territory.

General Hassan Firouzabadi, the Iranian armed forces chief, said Iran wanted its neighbor Turkey to feel secure but called for NATO not to deploy the Patriots in its easternmost member state, which also borders Iran.

“Each one of these Patriots is a black mark on the world map, and is meant to cause a world war,” Firouzabadi said, according to the Iranian Students’ News Agency. “They are making plans for a world war, and this is very dangerous for the future of humanity and for the future of Europe itself.”

Iran has been a staunch ally of Syrian President Bashar Assad throughout the 21-month uprising against his rule and long a strategic adversary of Western powers who have given formal recognition to Syria’s opposition coalition.

U.S. Defense Secretary Leon Panetta signed an order on Friday to send two Patriot missile batteries to Turkey along with American personnel to operate them, following similar steps by Germany and the Netherlands.

Iranian officials including parliament speaker Ali Larijani have previously said that installing the Patriot missiles would deepen instability in the Middle East, and the foreign ministry spokesman said they would only worsen the conflict in Syria.

Turkey has repeatedly scrambled jets along its border with Syria and responded in kind when shells and gunfire from the Syrian conflict have hit its territory, fanning fears that the civil war could inflame the wider region.

 

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