Hedge Fund Vultures In Puerto Rico

[ksen]

http://hedgeclippers.org/hedgepapers-no-17-hedge-fund-billionaires-in-puerto-rico/

Hedge funds and billionaire hedge fund managers have swooped into Puerto Rico during a fast-moving economic crisis to prey on the vulnerable island. Several groups of hedge funds and billionaire hedge fund managers have bought up large chunks of Puerto Rican debt at discounts, pushed the island to borrow more, and are driving towards devastating austerity measures. At the same time, they are also using the island as a tax haven.

The hedge fund billionaires active in the Puerto Rican debt crisis are the same characters pushing austerity and privatization in New York and across America.

They are fueling inequality by demanding low taxes on wealthy investors, higher taxes on working people, lower wages, harsh service cuts and privatization of public schools.

These hedge fund guys are getting so big they are able to ruin entire countries. They ought to be put down like rabid dogs.

The article also names names.

 

[dismal]

Not sure how buying debt at a discount causes the parade of horribles you imagine here.

You can't just wake up one morning and decide to buy debt at a discount. There has to be a reason someone is selling debt at a discount.

 

[Togo]

Not sure how buying debt at a discount causes the parade of horribles you imagine here.

You can't just wake up one morning and decide to buy debt at a discount. There has to be a reason someone is selling debt at a discount.

Yes, generally it's because they don't think they're going to get some proportion of their money back, or that it's going to become expensive to collect. Of course treating people with dignity and respect, and respecting democratic freedoms, is all very expensive. Simply taking over various organs of government to allow collection agents to circumvent laws that protect people results in more money extracted in a short period of time. It also causes a lot of long-term damage, but that's not their problem, right?

 

[dismal]

Not sure how buying debt at a discount causes the parade of horribles you imagine here.

You can't just wake up one morning and decide to buy debt at a discount. There has to be a reason someone is selling debt at a discount.

Yes, generally it's because they don't think they're going to get some proportion of their money back, or that it's going to become expensive to collect. Of course treating people with dignity and respect, and respecting democratic freedoms, is all very expensive. Simply taking over various organs of government to allow collection agents to circumvent laws that protect people results in more money extracted in a short period of time. It also causes a lot of long-term damage, but that's not their problem, right?

Um, OK. None of that makes any sense that I can tell. Last I checked Puerto Rico borrowed the money through their democratic freedoms and promised to pay it back with their democratic freedoms. The people who were stupid enough to believe their promise they would pay it back bought the debt with their democratic freedoms and will now lose a lot of money selling the debt at a discount with their democratic freedoms.

It seems to me if anyone caused lasting damage it was the Puerto Rican government operating with its democratic freedoms and its dignity and respect to borrow massive amounts of money it could not pay back.

The evil and greedy vulture funds do not start circling until there is a corpse, so it seems a bit absurd -- even by ksen logic -- to blame them for the corpse.

 

[Togo]

Yes, generally it's because they don't think they're going to get some proportion of their money back, or that it's going to become expensive to collect. Of course treating people with dignity and respect, and respecting democratic freedoms, is all very expensive. Simply taking over various organs of government to allow collection agents to circumvent laws that protect people results in more money extracted in a short period of time. It also causes a lot of long-term damage, but that's not their problem, right?

Um, OK. None of that makes any sense that I can tell. Last I checked Puerto Rico borrowed the money through their democratic freedoms and promised to pay it back with their democratic freedoms. The people who were stupid enough to believe their promise they would pay it back bought the debt with their democratic freedoms and will now lose a lot of money selling the debt at a discount with their democratic freedoms.

It seems to me if anyone caused lasting damage it was the Puerto Rican government operating with its democratic freedoms and its dignity and respect to borrow massive amounts of money it could not pay back.

The evil and greedy vulture funds do not start circling until there is a corpse, so it seems a bit absurd -- even by ksen logic -- to blame them for the corpse.

My reading was that he was not blaming them for the corpse, the fact of the debt, but the ripping of flesh from bones in an effort to repay it. Just because money is owed does not mean the owners of the debt can do anything they please to recover it. That's why this kind of governmental capture by private debt collectors is such a problem.

 

[dismal]

Um, OK. None of that makes any sense that I can tell. Last I checked Puerto Rico borrowed the money through their democratic freedoms and promised to pay it back with their democratic freedoms. The people who were stupid enough to believe their promise they would pay it back bought the debt with their democratic freedoms and will now lose a lot of money selling the debt at a discount with their democratic freedoms.

It seems to me if anyone caused lasting damage it was the Puerto Rican government operating with its democratic freedoms and its dignity and respect to borrow massive amounts of money it could not pay back.

The evil and greedy vulture funds do not start circling until there is a corpse, so it seems a bit absurd -- even by ksen logic -- to blame them for the corpse.

My reading was that he was not blaming them for the corpse, the fact of the debt, but the ripping of flesh from bones in an effort to repay it. Just because money is owed does not mean the owners of the debt can do anything they please to recover it. That's why this kind of governmental capture by private debt collectors is such a problem.

They have no legal power to "rip flesh off the bones". All they have is the rights granted under the debt that the government of Puerto Rico issued through the noble and heroic and dignified democratic process. You do realize that Puerto Rico borrowed lots of money and promised to pay it back?

 

[repoman]

Seems like the "The Jewish Question" may be more important than "White Privilege" here.

 

[ksen]

Not sure how buying debt at a discount causes the parade of horribles you imagine here.

You can't just wake up one morning and decide to buy debt at a discount. There has to be a reason someone is selling debt at a discount.

Not sure how you got that buying debt at a discount was my problem with what's going on.

Wait, I do now how you got that. It was the most tangential point you could pull out of the article to focus on.

 

[dismal]

Not sure how buying debt at a discount causes the parade of horribles you imagine here.

You can't just wake up one morning and decide to buy debt at a discount. There has to be a reason someone is selling debt at a discount.

Not sure how you got that buying debt at a discount was my problem with what's going on.

Wait, I do now how you got that. It was the most tangential point you could pull out of the article to focus on.

I think perhaps it was the focus of your post being on the evil and greedy and evil evildoers whose crime against humanity is buying debt at a discount.

 

[ksen]

Not sure how you got that buying debt at a discount was my problem with what's going on.

Wait, I do now how you got that. It was the most tangential point you could pull out of the article to focus on.

I think

perhaps it was the focus of your post being on the evil and greedy and evil evildoers whose crime against humanity is buying debt at a discount.

You ok today dismal? This one is pretty weak. It's like you're not even trying.

If you got shit going on irl I don't mind waiting until you're ready to bring your A-game back.

 

[dismal]

I think

perhaps it was the focus of your post being on the evil and greedy and evil evildoers whose crime against humanity is buying debt at a discount.

You ok today dismal? This one is pretty weak. It's like you're not even trying.

If you got shit going on irl I don't mind waiting until you're ready to bring your A-game back.

Well, you're already abandoning all attempts at arguing a coherent point and going after me personally so I must be doing OK.

 

[ksen]

Stop being a baby, you give just as good as you get.

 

[dismal]

Stop being a baby, you give just as good as you get.

The main point there is about your complete lack of coherent argument in support of your point. I don't give much of a crap about you going after me personally. It feels like winning.

 

[ksen]

Stop being a baby, you give just as good as you get.

The main point there is about your complete lack of coherent argument in support of your point.

The problem is on your end since you are attributing to me an argument I never made, i.e. that the problem with hedge funds is that they buy debt at a discount

I don't give much of a crap about you going after me personally. It feels like winning.

#winning!

 

[dismal]

The problem is on your end since you are attributing to me an argument I never made, i.e. that the problem with hedge funds is that they buy debt at a discount

Then what is the problem? They want the debt to be repaid?

I think the previous debt holders wanted that too. I think most every debt holder in the history of debt holding wants to be repaid.

 

[Togo]

My reading was that he was not blaming them for the corpse, the fact of the debt, but the ripping of flesh from bones in an effort to repay it. Just because money is owed does not mean the owners of the debt can do anything they please to recover it. That's why this kind of governmental capture by private debt collectors is such a problem.

They have no legal power to "rip flesh off the bones". All they have is the rights granted under the debt that the government of Puerto Rico issued through the noble and heroic and dignified democratic process.

Which is why they're pushing for legal changes. If they were only claiming under the original terms of the debt there wouldn't be any profit for them in it. You did read the article, right?

You do realize that Puerto Rico borrowed lots of money and promised to pay it back?

Under the original terms of the loan and government yes. You do realise that debt is priced according to the expected recovery rate, and that the reason the hedge funds are seeing a profit to be made is via changing those conditions to ensure a higher repayment, in some cases higher than was the case under the original terms of the loan?

 

[dismal]

They have no legal power to "rip flesh off the bones". All they have is the rights granted under the debt that the government of Puerto Rico issued through the noble and heroic and dignified democratic process.

Which is why they're pushing for legal changes. If they were only claiming under the original terms of the debt there wouldn't be any profit for them in it. You did read the article, right?

You do realize that Puerto Rico borrowed lots of money and promised to pay it back?

Under the original terms of the loan and government yes. You do realise that debt is priced according to the expected recovery rate, and that the reason the hedge funds are seeing a profit to be made is via changing those conditions to ensure a higher repayment, in some cases higher than was the case under the original terms of the loan?

When you buy debt you get the rights that were granted to the debt holders when the debt was originally sold. No more, no less.

 

[repoman]

I think that they want the close to 100% of the original debt paid to them even though they pay as low as 10% of the value of the debt.

It seems to be that they are connected to the New York financial and legal system is how they can get a good chance of getting the debt paid off at that level.

I think that transferring debt like this should be heavily regulated or not permitted at all.

 

[Togo]

Which is why they're pushing for legal changes. If they were only claiming under the original terms of the debt there wouldn't be any profit for them in it. You did read the article, right?

You do realize that Puerto Rico borrowed lots of money and promised to pay it back?

Under the original terms of the loan and government yes. You do realise that debt is priced according to the expected recovery rate, and that the reason the hedge funds are seeing a profit to be made is via changing those conditions to ensure a higher repayment, in some cases higher than was the case under the original terms of the loan?

When you buy debt you get the rights that were granted to the debt holders when the debt was originally sold. No more, no less.

Yes, which is why the OP isn't about the practice of buying debt, but about the tactics used by vulture funds who acquire and consolidate such debt. Just as ksen said in post #14, as well as in the OP, and as explained in the article that we're discussing.

I would have thought that market manipulation, tax havens, using government lobbying to change debt priority in favour of certain debtors and against others in violation of the original terms of the deal, and seeking funds and financial concessions over and above the terms of the original debt, are all things that you would actually oppose. They're all violations of free and open markets.

 

[Loren Pechtel]

Not sure how buying debt at a discount causes the parade of horribles you imagine here.

You can't just wake up one morning and decide to buy debt at a discount. There has to be a reason someone is selling debt at a discount.

Second this. The discounts came first. They're just betting that Puerto Rico will recover.

And they certainly aren't pushing them to borrow more, although their debt buying might enable them to borrow more.