What Life Is Like For A Million People In Puerto Rico Who Still Don"t Have Power

Authored by Daisy Luther via The Organic Prepper blog,

If you ever wondered what it would look like if the grid collapsed here on the mainland, the island of Puerto Rico is a tragic, real-life case study.

These stories show us what life is like for more than a million people who STILL don’t have power and running water nearly 3 months after Hurricanes Irma and Maria devastated their communities.

According to a website showing the status of utilities on the island, four months after two hurricanes wrought havoc, 32% of Puerto Ricans are still without power and nearly 10% are still without running water. However, even those who have running water must boil it.

But statistics don’t tell the real story.

At first, it was a war zone.

In the first days after the grid went down, chaos ruled. I vetted as many of the stories as I could and concluded:

…there is very little food, no fresh water, 97% are still without power, limited cell signals have stymied communications, and hospitals are struggling to keep people alive. There is no 911. Help is not on the way. If you have no cash, you can’t buy anything. As people get more desperate, violence increases. (source)

A friend wrote this post about her family on Puerto Rico:

“My family has lost everything. My uncle with stage 4 cancer is in so much pain and stuck in the hospital. However, conditions in the island are far worse than we imagined and my greatest fear has been made reality. The chaos has begun. The mosquitos have multiplied like the plague. Dead livestock are all over the island including in whatever fresh water supplies they have.

 

My family has been robbed and have lost whatever little they had left. The gang members are robbing people at gunpoint and the island is in desperation. People are shooting each other at gas stations to get fuel.

 

They’re telling us to rescue them and get them out of the island because they are scared for their lives. We’re talking about 3.5 million people on an island, with no food, no drinking water, no electricity, homes are gone. Family if you have the means to get your people out, do it. This is just the first week. Imagine the days and weeks to come. These are bad people doing bad things to our most vulnerable.

 

Imagine a few weeks with no resources and the most vulnerable become desperate. What are you capable of doing if your children are sick and hungry? We have to help.” (source)

Other outlets told the same stories. Jeffrey Holsman wrote a guest post for USA Today, sharing what he was witnessing.

The sounds of automatic weapons firing were audible Tuesday evening in San Juan. We were told the National Guard had arrived, but I hadn’t personally seen a Jeep or uniform in the streets yet.

 

Total darkness has swallowed Puerto Rico, as it has every night since the 12-hour monster Hurricane Maria roared across the island with more than 20 inches of rain and 155 mph winds. I’ve never experienced anything like it: wind and rain from every direction, pounding continuously.

 

Now, a war zone best describes what’s left of what was once an emerald green gem in the Caribbean…

 

…after Maria, we face hours upon hours of waiting in lines for gas that might not be there; hours waiting in bank and ATM lines for money that might not be there; hours waiting in grocery store lines for food that might not be there. (source)

It only took a few days before people began to become ill from the tainted water. There were many injuries related to the storm, as well as the aftermath, and these crises were compounded by the lack of medical assistance.

Only 11 of 69 hospitals on Puerto Rico have power or are running on generators, FEMA reports. That means there’s limited access to X-ray machines and other diagnostic and life-saving equipment. Few operating rooms are open, which is scary, considering an influx of patients with storm-related injuries. (source)

People were unable to acquire essential medications and treatments like dialysis.

And this was only the beginning.

One month after the disaster…

A month after Hurricane Maria, the situation was still very grim. Three million residents were still without electricity and one million were without running water. (source) Officials reported 54 deaths attributed to the hurricane but many said that the number was far higher. The mayor of San Juan said that the number of cremations had doubled and put the actual casualties at closer to 500 people.

She said: “It appears, for whatever reason, that the death toll is much higher than what has been reported. What we do know for sure is that people are being catalogued as dying…natural deaths”.

 

She explained that some of the deaths relating to the hurricane were being reported as “natural causes” because the storm was the secondary factor in their death.

 

For example, some people reportedly suffocated after their respirators stopped due to the power cut…

 

…The bodies were cremated before the medical examiner could determine whether they should have been included in the official death toll.

 

Accurate information about the figure is particularly important in the US because if a person dies in a natural disaster, their family has the right to claim federal aid. (source)

Evelyn Milagros Rodriguez, a librarian at the University of Puerto Rico wrote a first-person account of the aftermath during the first month post-Maria. She reported that the books, computers, and furniture at the library were mostly ruined and that mold had invaded the building. Here’s an excerpt from her story:

What outsiders are unable to see, perhaps, is that an entire culture has arisen around the catastrophe caused by Hurricane Maria – one with typically catastrophic traits: material scarcity, emotional trauma, economic catastrophe, environmental devastation.

 

Puerto Ricans are now facing a dramatically different way of life, which means our relatives and friends in the diaspora are, too.

 

Nothing about life resembles anything close to normal. An estimated 100,000 homes and buildings were demolished in the storm, and 90 percent of the island’s infrastructure is damaged or destroyed. Not only are there shortages of water and electricity but also of food, highways, bridges, security forces and medical facilities.

 

It’s dangerous to venture outside at night. An island-wide curfew was lifted last week, but without streetlights, stoplights or police, driving and walking are dangerous after dark.

 

The official tally of missing people varies, with police tallies ranging from 60 to 80 right now. Considering Puerto Rico’s hazardous conditions and limited health care services, that number is sure to rise. We are well aware that epidemic diseases, including leptospirosis and cholera, could come next. Health concerns are further stoked by the delays and disarray of the various federal agencies tasked with handling this emergency. (source)

Leyla Santiago, a CNN journalist who had been born in Puerto Rico and still has family there, echoed the librarian’s story in her own report.

Puerto Rico has also changed forever.

 

The struggles are everywhere. And where there is help or supplies, there are lines, always lines.

 

Some days, it would be people lining up for gas. And then for food at the supermarket. The longest lines were now to use the ATM.

 

I became numb to the lines quickly.

 

When we passed another long one at the port, I didn’t think anything of it. Until it hit me.

 

Thousands were lining up to leave Puerto Rico. I watched as an old man dragged an oxygen tank, while pleading with organizers to let him on that massive cruise ship now acting as a refugee transport. Another man lifted his shirt to show the scars from an operation, hoping it would convince the right people that he needed to get off the island. (source)

Although unthinkable, it’s even worse in more remote areas of Puerto Rico. Despite their preparations, Rosana Aviles Marin’s elderly parents’ lives were devastated in their central mountain village.

The winds of up to 155 miles per hour that roared across the island buckled the house’s walls and tore holes in the ceiling, letting in water that destroyed furniture, framed photos of Marin and her siblings, and brightly colored ceramic statues of Jesus.

 

That wasn’t all it destroyed. The storm also downed power lines throughout the area, and Marin and her parents have been entirely without electricity for weeks. Much of their food went bad, they have no cellphone service, and local markets and restaurants remain closed. Her parents use a small diesel generator to power lights and, for a few hours per day, a small refrigerator. The rest of the time, she tells me during a recent trip to the area, “my parents live in darkness.” (source)

The island’s major source of revenue has been tourism, and that has all but stopped since the hurricane. Considering how badly they were struggling economically before, that is just another blow to a place driven to its knees.

The narrow blue cobblestone streets of Old San Juan are deserted. Cigar shops are boarded up. Boutiques in bright colonial buildings are closed...

 

...About a third of the hotels in Puerto Rico remain shuttered. Restaurants and shops are still without power. Beaches are closed for swimming because of possible water contamination.

 

The high season begins in December, and tourism officials are hoping to lure some visitors, but that depends on when power is fully restored and how quickly hotels and attractions can repair the catastrophic damage. (source)

It’s a Catch-22. Until the tourists return, many won’t be able to afford to restore their businesses. But until they restore their businesses, the tourists won’t return.

Two months after…

Two months to the date after Maria struck with a vengeance, only half of the residents of the island had power. The return of infrastructure began in the cities and wealthier areas. Those in poor or remote areas are still waiting. 

Here’s a video of what it looks like in Puerto Rico right now as people struggle to restore electricity.

Billions of dollars were allocated by the government and millions has come in from private donors.

 

Politicians have been in and out of the island and that has led to a spending law that provides $5 billion for Puerto Rico’s recovery and billions for government agencies providing disaster assistance. Projections are that a lot more will be needed.

 

On top of that, millions has been raised and contributed by private groups and foundations and individuals.

 

Cruz (the mayor of San Juan) said people from around the United States have been sending small donations, money orders, $50 or $10 attached to cards or pieces of paper. Some gave as much as $300 to $500.

 

“We’re going to use it to rebuild homes, to make sure people have good drinking water, because even if it comes out of a faucet it has to be drinkable, to schools for children. Some of the schools have been in really bad shape. Twenty-five percent of what comes into the foundation goes to other towns outside of San Juan,” she said. (source)

At two and a half months post-hurricane, PBS reported the following statistics:

• 66 percent of power on the island has been restored


• 93 percent of the island has access to water, but it remains on a boil advisory


• 73 percent of cell sites are up and running


• 982 survivors remain in 41 shelters across the island

The island still looks like a war zone.

Trash and debris from the storm remain a rampant problem. The U.S. Army Corps of Engineers reported it has removed more than 639,000 cubic yards of debris. But it is still tasked with removing at least 2.7 million remaining cubic yards. (source)

Residents of the island are without resources and are at the mercy of FEMA…and government funding.

Democratic Sens. Bernie Sanders and Elizabeth Warren unveiled a bill that would provide $114 billion in aid to Puerto Rico and the U.S. Virgin Islands…

 

[But] the package is unlikely to get a vote, analysts say

 

Meanwhile, more than 200,000 people from Puerto Rico have arrived in Florida since Maria hit, according to the Florida Division of Emergency Management.

 

FEMA is now moving from response to recovery mode. FEMA is still providing daily food, fuel, and water to survivors of Maria, the longest such sustained distribution after a disaster in FEMA history. (source)

You can get more details about the proposal here.

And now, the return of electricity has been further delayed.

Previously, Puerto Rican officials estimated that the island would have electricity again by December? It turns out they were wrong. Now it looks like everyone in Puerto Rico won’t have power until February… at the earliest.

PREPA acting Director Justo Gonzalez cited “natural” and hurricane damage to the power grid that was initially unidentified as the reason for the delay of power generation.

 

Others have said full power and other utilities will not be completely restored until March. (source)

Between Puerto Rico’s economic problems and an aging grid, this isn’t a speedy process.

Before the storm hit, I wrote an article predicting at least a 6-month wait before power was restored, and this was for a variety of reasons. I cited Philipe Schoene Roura, the editor of a San Juan, Puerto Rico-based newspaper, Caribbean Business, who wrote of the many reasons that it would take so long:

“The lifespan of most of Prepa’s equipment has expired. There is a risk that in light of this dismal infrastructure situation, a large atmospheric event hitting Puerto Rico could wreak havoc because we are talking about a very vulnerable and fragile system at the moment,” Ramos added…

 

…Francisco Guerrero (a fictitious name to protect his identity), a Prepa field worker for 23 years, said it would take months for Prepa to bring up Puerto Rico’s power system should a hurricane like Harvey strike the island.

 

The lack of linemen and other technical personnel, as well as a lack of equipment—including replacement utility poles for powerlines and replacement parts—are the issues of greatest concern among public corporation employees, who say they risk their lives working with equipment in poor condition that provides them with little safety.

 

Guerrero said that today only 580 linemen remain out of the 1,300 who were part of the workforce in previous years—and that’s not counting the upcoming retirement of another 90 linemen. Likewise, he said there are only 300 electrical line testers to serve the entire island.

 

The source also said that much of Prepa’s equipment dates back to the 1950s—and the more “modern” equipment that is still functional dates from the 1990s; in other words, it’s from the past century.

 

“If a hurricane like this one [Harvey] hits us, the system is not going to come online, I’d say, in over six months. Right now, the warehouses don’t even have materials. I’m talking about utility poles and other stuff,” Guerrero explained. (source)

It turns out that Rora was not exaggerating. But money and a dilapidated system aren’t the only problems. There is an issue of geography as well.

Puerto Rico’s biggest power generators are on the south of the island, but most of its inhabitants live on the north side, primarily in San Juan. There are four high-capacity transmission lines that carry power from the south to the north, and they pass through the center part of the island, the region Marin calls home. The problem is that central Puerto Rico is mountainous, full of huge swaths of thick forest, and mainly reachable only by driving on terrifyingly narrow dirt roads.

 

That makes it hard to reach those four vital lines even in the best of circumstances. In post-Maria Puerto Rico it’s even harder, because the center of the island was the region hardest hit by the hurricane. Since the government is trying to get power to San Juan first, that means those in the regions devastated most by the hurricane will be waiting the longest for power to be restored. Sánchez, the engineer, says workers would need to be flown in by helicopter to clear debris before repairs could even begin. (source)

Would you be prepared for something like this?

If you think something like this couldn’t happen to us on the mainland, you’re deluding yourself.

Our grid isn’t in fantastic shape either. For years, people in the know have been warning that our electrical infrastructure is aging and unstable. It would cost us a mindboggling 5 trillion dollars to replace the decrepit system, and age isn’t the only threat. The possibility of an EMP strike could take it down permanently (and that threat seems more real every day as tensions with North Korea rise.) If our grid was taken down by such an attack, it could kill 90% of Americans within the first year.

We would lose

• Power.


• Refrigeration.


• Heating and cooling.


• Our economy.


• Fresh, running water.


• Medical care.

The list could go on and on.

Few people would be ready for an event that took out the entire infrastructure for an extended period of time.  I personally lean toward a more low-tech plan for long-term scenarios like this. (For one reason, look how difficult fuel is to come by in Puerto Rico right now.)

Learning from the real-life experience of others give us just a glimpse of what we could expect.

"It Will Be A Disaster": Puerto Rico To Run Out Of Cash On October 31

While Puerto Rico is way beyond a simple solvency crisis, having already filed for bankruptcy earlier this summer - and courtesy of Donald Trump there is now debate whether or not the island"s $74 billion in debt will be forgiven outright - it is now also on the verge of a full-blown liquidity collapse. According to Treasury Secretary Raul Maldonado, Puerto Rico faces a government shutdown on Oct. 31, at which point it will run out of cash, resulting in a halt to its hurricane recovery, unless of course the US doesn’t provide billions in emergency funds.

Indeed, while the muni bond market freaked out today after Trump said on Tuesday night that Puerto Rico"s debt may need to be "wiped out", focusing attention on the commonwealth’s staggering $74 billion debt, Puerto Rico faces a more immediate crisis in the wake of the storm: it is about to run short of money for fuel, salaries of recovery workers and food aid.

Meanwhile, only 8.6% of customers have electricity, mobile-phone service is sharply curtailed and many mountainous rural areas remain inaccessible.

According to Bloomberg, the U.S. commonwealth’s bankrupt government is burning through the $1.6 billion it had on hand before Hurricane Maria devastated the island. Furthermore, with widespread damage to telecommunications systems and the electricity grid, the Treasurer said he be unable to begin collecting sales tax for at least another month.

“I don’t have any collections, and we are spending a lot of money providing direct assistance for the emergency,” he said in an interview in San Juan. “Without the assistance from Congress, Puerto Rico’s government will not be able to operate next month.”

“You have conservatively over 100,000 homes that are destroyed here,” Governor Ricardo Rossello said an interview Wednesday.

“Essentially you’re looking at zero revenue for the next couple of months,” he said. “While you have zero revenue, you still have expenditures, plus emergency expenditures. That means the money is going to run out very quickly."

Hence the need for Uncle Sam to step in: Maldonado said he has requested between $6 billion and $8 billion in aid from Congress to keep the government running for “a few months.”

And unless Congress does step in, Puerto Rico will go dark in just under a month. Literally.

The treasurer said he has set aside funds to make payroll and pension payments in October. But if Congress fails to act, he said the island is facing a "total shutdown” on Nov. 1 that would curtail essential services and the distribution of aid.

The good news for Puerto Rico is that, at least at first glance, Congress is willing to cooperate:

Senate Majority Leader Mitch McConnell said in a press statement that the Senate stands ready to help. House Speaker Paul Ryan’s office didn’t respond to a request to discuss the Oct. 31 run-dry date. Nancy Pelosi, the Democratic House minority leader, said earlier Wednesday that the Treasury Department should extend a loan to help Puerto Rico in the short term.

That said, Congressional enthusiasm may be dampened once the broke island comes asking for tens of billions more for its long-term recovery efforts.

Destroyed PR homes sit surrounded by debris from Hurricane Maria

Also on Wednesday, the Trump administration was finalizing a $29 billion disaster-aid request covering a series of major storms in the U.S. But Puerto Rico’s control board, created by the law that allowed the commonwealth to enter bankruptcy, has said Maria may have caused as much as $95 billion in damages, more than the island’s annual gross domestic product.

Meanwhile, perhaps sensing that Congressional, and Trumpian generosity, may soon reach its limits, Puerto Rico control board, which has broad oversight over the island’s finances, requested for immediate aid Tuesday. "In a letter the panel sent congressional leaders, the officials asked the federal government to make low-interest loans available to ease the impending liquidity crisis."

And, in a deja vu moments from Hank Paulson"s request for a blank check from Congress ahead of the TARP bailout of US banks, Puerto Rico did its best imitation of requesting the "greatest amount of federal aid", or else:

“Failure to provide the greatest amount of federal aid and the emergency liquidity program will be potentially ruinous," chairman Jose Carrion wrote. "We must do all that we can to help Puerto Rico avert a tragedy of historic proportions."

The panel also asked that the federal government waive cost-sharing limits, disaster spending caps and grants for long-term relief. Then, for his final Hank Paulson rendition, Maldonado said that If Congress doesn’t act, “it will be a disaster.”

“We Can’t Wait for Government.” Pop Star Daddy Yankee Saves Puerto Rican Food Bank and Delivers Aid

Via The Daily Bell

Puerto Rican authorities are blaming the White House for not properly responding to the disaster caused by Hurricane Maria. Trump, in turn, tweeted that about the poor leadership within Puerto Rico and claimed the politicians were just trying to score political points.

There have been unverified reports that officials in Puerto Rico were, in fact, holding back supplies unless there were accompanying photo opportunities.

And among all the pointing fingers and he said she said, the people of Puerto Rico are getting at least some aid.

That is because while governments fight, obstruct, and grandstand to advance their political careers, real people help.

Puerto Rican native and pop star Daddy Yankee delivered what FEMA, and the government of Puerto Rico could not. He gave $100,000 in assistance to feed the people whose homes were destroyed, who were left without power or water after the hurricane struck over a week ago.

The money provided food to roughly 9,000 families in Toa Baja, an impoverished town of 80,000 people near Puerto Rico’s capital, San Juan…

Each family on Saturday received 59 pounds of food, not including rations of water too. The box of food included rice, pasta, tuna, beans, beef and milk. Food Bank officials say it’s enough to feed a family of four for a week.

But the pop-star didn’t stop there. While he was touring the food bank, the director mentioned how she was desperate for diesel fuel to run the generators. She had only enough to provide electricity to the building for two more hours. Without power, 25,000 pounds of food stored in the freezers of food bank would have been at risk of going to waste.

So Daddy Yankee’s entourage made some phone calls and delivered 200 gallons of fuel, enough diesel to run the generators for another week.

“We got the diesel! We got the diesel!” the pop star proclaimed at the Food Bank. “We can’t wait for the government.”

Maybe it was the bureaucracy of government, or maybe it was their political positioning. Maybe it was government’s typical incompetence and lack of preparations. But the government failed to deliver help to the people they claim to keep safe. Disasters like these are government’s time to shine. This is why the government is so vital, they tell us.

And yet reports run rampant of corruption of local officials, and the refusal of local police to protect people from looters and robbers.

The governments of Puerto Rico, San Juan, and the United States all proved ineffective in delivering the most basic necessities to the people affected by the disaster. And time after time we see that people who put their trust in government, people who depend on authorities as their backup plan, are let down.

In this instance, people were simply lucky that someone rich enough cared enough to do something to save them.

But the best advice is still to be prepared yourself for the most likely disasters. Do a little prepping for unfortunate circumstances which might befall you and your family. Cash, protection, and of course food and water should be on hand to last you at least a week, or significantly longer if properly rationed.

3 Ways To Help Puerto Rico Right Now

There is a lot to learn from the slow and painful post-hurricane recovery that is going on in Puerto Rico right now.

One of Puerto Rico"s biggest problems is that it is by far, one of poorest areas of the United States. The median household income in Puerto Rico is approximately $18,600. The median household income in the United States, by contrast, is around $57,000.

As we"ve recently discussed here at mises.org (see here and here) it is generally far more difficult for low-income areas to weather storms, than it is for high income areas. The amount of capital at hand for repair and recovery is less in poor areas, as is the wealth available for constructing high-quality infrastructure. 

Repeating this fact to Puerto Ricans, however, does them little good in the short term. So we must explore ways that Puerto Rico could be helped right now in gaining greater access to badly needed goods and services. 

One: Repeal the Jones Act 

Unbeknownst to many Americans, shipping in the United States exists under the shadow of highly protectionist and archaic regulations passed as part of the Jones Act. The Jones Act was originally passed in 1920 as part of an effort to increase the number of merchant marine vessels produced by the United States. It restricts trade between American ports to vessels built and owned by Americans, and to vessels whose crew is at least three-quarters American. Unfortunately, as Gary Galles notes, the Act "works against its stated goals, and does so at a steep cost." 

The Jones Act drives up the cost of goods and services by restricting shipping options for merchants. As Galles explains, this can be especially damaging in times of natural disasters: 

In the aftermath of Hurricanes Katrina and Sandy, Jones Act restrictions were suspended because they hindered emergency responses. In 2014, New Jersey was not allowed to use a foreign ship to bring rock salt from Maine in time to respond to a snowstorm.

A Jones Act-eligible ship required far more time and added $700,000 to the cost. And such problems extend beyond emergencies. Maryland imports rock salt from Chile rather than Louisiana, because shipping it all the way from Chile is three times cheaper than Jones Act domestic transportation.

These issues can be especially damaging to places like Puerto Rico and Hawaii. Galles continues: 

In 2014, shipping a forty-foot container from Los Angeles to Honolulu reportedly cost more than ten times shipping it to Singapore. Dependent on Jones Act shipped petroleum for three-quarters of its electricity generation, Hawaii’s electricity prices are almost double the next most expensive state.

A 2012 report found that sending a container of household goods from the east coast to Puerto Rico cost more than double that to nearby Santo Domingo. A GAO study found that some Puerto Rico companies had shifted sourcing from America to Canada, due to cost savings from escaping Jones Act restrictions.

The Jones Act"s effects on cutting resources for places like Puerto Rico are so undeniable that the Act was suspended early in September to allow for Puerto Rico to stock up on fuel and other necessities in preparation for the storm. The waiver expired after September 22, however, greatly diminishing the supply of fuel coming into the island. 

Even John McCain, rarely quoted as one of the good guys in these pages, has urged the total repeal of the Jones Act, calling it an "archaic and burdensome act." McCain is right. 

Only after substantial pressure did the Trump administration finally relent, and it granted a new waiver on Wednesday. 

Total repeal should be next on the agenda, as it"s absurd to wait for a highly destructive hurricane before allowing Puerto Ricans to access goods and services at lower cost. 

Two: Declare Puerto Rico a Free Trade Zone 

Why stop with just a repeal of the one protectionist measure that is the Jones Act? 

Puerto Rico is subject to American customs and trade laws, and thus importing goods and services into the island is limited by tariffs, quotas, and other protectionist measures — thus driving up the costs of goods and services. 

Given Puerto Rico"s desperate need for supplies in the wake of Maria, the humane thing to do would be to grant trade autonomy to Puerto Rico allowing it to engage in total unilateral free trade in order to attract merchants from all over the world.

Unilateral free trade, of course, is beneficial always and everywhere. But in the short term, Congress and the administration can begin small and simply declare Puerto Rico to be an open port in which all goods can be imported duty-free. This would end the need to restrict trade and collect tariffs in Puerto Rico to remain in accordance with US law. A look at US customs policies reveal restrictions fall on a variety of highly-useful products in times of emergency including ethyl alcohol, dried milk, and peanuts. 

Other disastrous trade restrictions include the Trump administration"s new tariff slapped on lumber earlier this year. The end effect will be to drive up the cost of construction for everyone, but this will be most felt in hurricane-devastated areas.  

Needless to say, this policy of open trade would be most effective if both national and territorial officials allow merchants and importers to charge prices without fear of any restrictions on so-called price-gouging. Such restrictions would act to reduce the total amount of goods and services being brought to the island. 

Three: Remove Restrictions on Physical Cash

In times of emergency, when the electricity is out, access to physical cash becomes extremely important in facilitating a functional economy. In the wake of Hurricane Maria, ATMs ceased to function and armored car services had difficulty reaching banks. "Demand for cash [in Puerto Rico] is extraordinarily high right now," a Federal Reserve spokesman noted on Wednesday. 

While it is a good thing that the Fed believes it can soon ensure a working amount of cash in the region, the problem would have been largely avoidable were United States banking regulations not so geared toward restricting the use of physical cash. 

Prior to a looming natural disaster, of course, it would be wise to take out a significant amount of cash to make sure one can purchase goods and services even when power is out, and banks are closed. 

In the US, however, removing even a few thousand dollars from one"s accounts is likely to raise eyebrows and trigger greater surveillance from banking regulators. Technically, it is legal to withdraw cash amounts up to $10,000, but doing so can trigger government charges of "structuring" in which it is actually illegal to withdraw cash amounts under $10,000 total. In other words, its unclear as to how much cash one can actually withdraw without asking for trouble from federal banking regulators. Nor is this an especially huge amount, especially when power is expected to be out for months in some areas.

Both banks and their customers, however, are repeatedly discouraged from engaging in sizable cash transactions by federal regulators. 

A more reasonable government would seek to facilitate the use of physical cash in large amounts, especially in the lead up to natural disasters, so as to ensure residents need not resort to barter and other types of highly-inefficient transactions. 

Moreover, in a post-disaster situation, where communities have become more isolated, and access to resources on the mainland becomes limited, residents will become more dependent on short-terms loans, micro loans, and informal loans during the process of rebuilding. In many cases, these loans will be risky. Policymakers could help ensure that cash and capital reaches those who need it most by reducing banking restrictions and regulations on so-called usury, same-day lending, and other types of short-term and emergency loans.

It"s at times like these that the effects of government interventions, intrusions, and regulations come to be felt most. As resources become scarce, and established institutions may not be present or reliable, it becomes all the more important to facilitate a nimble and inventive marketplace in which solutions can be pursued quickly and in an unrestricted manner. 

As with all Americans nationwide, Puerto Ricans are subject to trade restrictions, taxes, and other regulations that cripple markets and impact their standard of living. Much of the time, these effects can be better tolerated because an abundance of goods continues to be available — even if made unnecessarily expensive. In the wake of a natural disaster, however, accessing goods and services becomes much more difficult, and it is at times like these that economic freedom is needed most.

Trump Will Visit Puerto Rico To "Survey Damage" As Locals Plead For Aid: "We Are Americans Too"

President Trump announced on Tuesday morning that he will travel to Puerto Rico next week to survey damage from Hurricane Maria, however he said that next Tuesday is the earliest he is able to travel to the island due to the damage. Trump said the island is "literally destroyed" but expressed confidence "they"ll be back." He said the people of Puerto Rico "are important to all of us."

.@POTUS: “Puerto Rico is very important to me…These are great people and we have to help them.” pic.twitter.com/bnBjyILJQr

— Fox News (@FoxNews) September 26, 2017

And while Trump added that federal authorities are landing relief supplies "on an hourly basis", Trump"s act may come as too little, too late for some of the locals, who felt the urge to remind the White House they are also Americans. That’s just what Governor Ricardo Rossello and the commonwealth’s government have done, over and over, in the wake of Hurricane Maria. “There needs to be unprecedented relief for Puerto Rico so that we can start the immediate effort right now,” Rossello said Tuesday on MSNBC.

As Bloomberg writes, Puerto Rico, an island of 3.4 million American citizens without a vote in Congress, is lobbying Washington for what could be billions in funding to rebuild its infrastructure, including its decimated energy grid. And it’s doing so amid an already costly hurricane season.

The island was crawling with 10,000 federal relief workers who were conducting search-and-rescue missions, helping bring electricity to hospitals, and providing aid packages, baby food and more. But with the Washington visitors on hand, Rossello’s team missed no opportunity to remind them of why Puerto Rico -- mired in bankruptcy and ill-equipped financially to go it alone -- shouldn’t become an afterthought.

Capsized boats on land in San Juan, Puerto Rico on Sept. 25

At the San Juan airport Tuesday, there were signs of exodus. People waiting for standby flights have been camped out for days. One mother with two infants in car-seat carriers broke into tears, while desperate tourists took out smartphones to film video and demand answers on why there wasn’t water and other provisions, outside of the expensive airport shops.

Yamira Feliciano Ribera, 40, was there with a group of six relatives and friends, including two children, ages 1 and 3. She said they’d slept on the hard floor using luggage for pillows.

“We want to get out of Puerto Rico for a better situation,” she said, doling out Cheerios to the children. “We’re without water, without AC, without cash.”

Additionally, over the weekend, some Puerto Ricans took offense when Trump went on a Twitter rant about professional athletes and their views on race relations, but omitted any comment on Puerto Rico, which was by that time falling deeper into crisis. When he did tweet Monday night, the president drew a comparison between the aftermath of Hurricanes Harvey and Irma with that of Maria: “Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble.”

Noting that “much of the Island was destroyed” and that it still owes Wall Street billions of dollars, he added: “Food, water and medical are top priorities - and doing well. #FEMA”

The tweets came after criticism from some corners of Congress, with Representative Adam Smith, the ranking Democrat on the House’s Armed Services Committee, blasting the administration’s response as “wholly inadequate.”

Still, the island’s leaders have been effusive. The visitors Monday were “a clear indication that the administration is committed” to Puerto Rico, Rossello said.

There was still plenty to do, though.

Rossello said he requested a temporary waiver on the cost-sharing between FEMA and the commonwealth. Normally Puerto Rico would commit 25 percent of the recovery funds, but it was already in fiscal straits and had filed for a form of bankruptcy protection before the disaster. After a disastrous debt binge, enabled by tax breaks that for decades had investors clamoring for its securities, Puerto Rico owes $74 billion. Rubio said Puerto Rico should have access to low-interest loans, and Rossello later said that could be through the Fed or Treasury Department.

It doesn"t look like Puerto Rico will get all its requested fulfilled, however. Jenniffer Gonzalez, Puerto Rico’s nonvoting congressional representative, said in an interview Monday that Puerto Rico sought an extended waiver on the Jones Act, a century-old set of rules that many say make imports more costly by requiring most good to be brought in by U.S. ships. But as the AP reported, the Trump administration doesn’t plan to waive the act.

She’s also spoken with House Speaker Paul Ryan about having the Federal Emergency Management Agency temporarily cover the full cost of the damage, instead of the typical 75 percent, although it was unclear if the request will be granted.

Rossello reminded his visitors Monday of the role Puerto Rico played as an aid hub after Irma, when the U.S. Virgin Islands were badly hit. And he sent his visitors home with a message for the rest of Washington: “Let them know that we’re committed U.S. citizens, proud U.S. citizens, who helped others when they were going through difficult times, not more than 10 days ago,” he said. “Now it’s time to help Puerto Rico back.”

Dramatic "Before And After" Photos Show Puerto Rico's Plunge Into Darkness

It’s been a week since Hurricane Maria made landfall in eastern Puerto Rico, and hundreds of thousands of Puerto Ricans living in remote villages remain cut off from the world, after the storm trashed power grids, tore up roads, downed cell towers and caused a dam in the northwestern part of the island to fail, endangering tens of thousands of people living in a valley below.

Hospitals, especially in rural areas, have been hopelessly crippled by the storm, which has left them dependent on backup generators for power, threatening the lives of thousands of vulnerable patients. Shipments of diesel fuel to the hospitals are delivered by armed guards to protect against looters – which sounds like something from the plot of one of the “Mad Max” movies.

CNN sent low-flying planes over the island to survey the landscape, and they’ve brought back some stunning footage of the damage. News anchor Jake Tapper tweeted this before-and-after photo, which shows how more than 90% remains mired in blackouts more than a week after the storm made landfall.

Satellite imagery shows how massive the power outages are in Puerto Rico. One is from July 24; the other from yesterday. H/t @NOAA pic.twitter.com/hoJF56rRIl

— Jake Tapper (@jaketapper) September 26, 2017

Some meteorologists said Maria hit Puerto Rico with the flooding of Hurricane Harvey in Houston, and the windspeeds of Hurricane Irma in Florida.  

"It is as if Puerto Rico got hit with the strength of Irma"s winds, leaving a trail of devastation worse than much of the destruction Irma left in Florida," said CNN meteorologist Judson Jones. "The rainfall in some areas of Puerto Rico rival the amounts of rain left by Harvey in Houston. And now they are contending with a dam disaster that is reminiscent of California"s Oroville Dam crisis earlier this year."

After flying over Puerto Rico on Sunday, CNN"s Leyla Santiago said residents could be seen along the highways searching for a cellphone signal. With the island’s emergency responders still struggling to evacuate and rescue villagers, the Trump administration has been criticized for not doing enough.

In a tweet Sunday, Clinton said, "President Trump, Sec. Mattis, and DOD should send the Navy, including the USNS Comfort, to Puerto Rico now. These are American citizens."

President Trump, Sec. Mattis, and DOD should send the Navy, including the USNS Comfort, to Puerto Rico now. These are American citizens. https://t.co/J2FVg4II0n

— Hillary Clinton (@HillaryClinton) September 24, 2017

Puerto Rico Governor Ricardo Rosselló appeared on Morning Joe Tuesday morning to plead for more assistance for the island.

“This has been an unprecedented disaster, not only for Puerto Rico, but for all of the region...we need more help. We need more help with resources. We need more help with people being deployed so that we can get logistical support elsewhere."

However, the White House has countered that airplanes and ships loaded with meals, water and generators have been arriving or are headed to Puerto Rico and other affected Caribbean islands. FEMA tweeted that more than 10,000 federal employees are in Puerto Rico and the US Virgin islands helping with search and rescue efforts and moving goods.

.@USCG continues hurricane #Maria response with 13 cutters, 10 aircraft, partners @fema @USNavy @prffa Read more https://t.co/HbIHmFe2f3 pic.twitter.com/R6ZBB13iuq

— USCGSoutheast (@USCGSoutheast) September 25, 2017

10k+ federal staff are on the ground in PR/USVI assisting with search & rescue, restoring power, & moving commodities. #Maria [????: @USArmy] pic.twitter.com/8mbThIzD7T

— FEMA (@fema) September 25, 2017

             CNN              reported that Homeland Security Adviser Tom Bossert and FEMA administrator Brock Long were traveling to Puerto Rico.

"The federal response has been anything but slow," Sanders said. "There"s been an unprecedented push through of billions of dollars in federal assistance."

As Bloomberg points out, Puerto Rico’s recovery will depend heavily on federal aid because the island simply has no money to cope with a catastrophe like the storm that passed through last week.

The island has effectively filed for bankruptcy to try and escape $70 billion of debt. The fiscal collapse has effectively shut down Puerto Rico’s access to the US bond market, promising to make it more difficult for the island’s government to borrow money for the rebuilding effort.

As President Trump pointed out in a series of late-night tweets, the island is in “deep trouble,” noting that the country’s “old” electrical grid was devastated.

Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble..

— Donald J. Trump (@realDonaldTrump) September 26, 2017

...It"s old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars....

— Donald J. Trump (@realDonaldTrump) September 26, 2017

...owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities - and doing well. #FEMA

— Donald J. Trump (@realDonaldTrump) September 26, 2017

Congress last year enacted emergency rescue legislation that extended Puerto Rico’s authority to seek court protection from creditors, which it previously lacked. But the federal government has provided little financial assistance beyond that.

Puerto Rico’s representative in Congress, Jennifer Gonzalez Colon, said she has talked with House Speaker Paul Ryan about securing more aid from the Federal Emergency Management Agency.

When it’s all said and done, the disaster could cost as much as $30 billion and some residents could be without power for months. As we reported yesterday, in many areas, residents have been forced to transact only in cash, which is quickly becoming a problem for those who didn’t stockpile enough money ahead of the storm.
 

Wrong Way! Why Would Puerto Rico Want to Become a State?

Via The Daily Bell

Secession has been a hot topic lately from Brexit, to Catalonia, to California; so why is Puerto Rico voting on statehood tomorrow?

It is a non-binding referendum which asks Puerto Ricans if they would rather the territory remain as it is now, become an American state, or go entirely independent. But some say the election has been rigged for the pro-statehood group.

And indeed, they seem to have the most power right now. The big fish in a small pond are seeking to form a delegation of two “Senators” and five “Representatives” in order to lobby Congress to admit Puerto Rico as the 51st American State. Puerto Rico already has a Congresswoman who goes to DC, though she is not a voting member. Go figure she supports statehood, as someone who has the most to gain from it.

But the real reason many Puerto Ricans see statehood as appealing: the territory is bankrupt. Somehow it only took $73 billion in debt (about $20,000 per capita) to bankrupt Puerto Rico, as opposed to close to $20 trillion in debt (over $60,000 per capita) the U.S.A. holds. (Puerto Rico cannot simply print more money to pay their debts in inflated currency as the U.S. does–a back door tax.)

Yet becoming a state would give Puerto Rico access to federal cash, since the federal government hands out funds to states in order to manipulate their policies, and gain allegiance.And why shouldn’t a government with triple the debt per citizen help out Puerto Rico? America has a magic protective shield around its finances; America’s chickens will never come home to roost. Totally makes sense to bring more bankrupt states into the fold, why the hell not?

And why shouldn’t a government with triple the debt per citizen help out Puerto Rico? America has a magic protective shield around its finances; America’s chickens will never come home to roost. Totally makes sense to bring more bankrupt states into the fold, why the hell not?

Some claim that Puerto Rico becoming a state would make it a better place to invest, as Americans wouldn’t see it as scary and foreign. They are wrong. Puerto Rico becoming fully subject to the taxes and regulations of the U.S.A. would absolutely make it less appealing than it is currently. Puerto Rico currently has a 4% income tax rate, and most investment income gets a full exemption from taxation.

If the Puerto Rican people were smart, they would vote for independence. Why would you subject yourself to a higher tax rate, which would only hurt the already touchy economy? Why would you scare away investors and businesses, and submit yourself to an even more debt-riddled government, with more restrictions on the freedom to live, work, and earn how you choose?

At a time when territories are rightfully asserting their independence from larger imperialist governments in order to have more control over the local issues which affect them, voting for statehood is a step backward for Puerto Rico.

Puerto Rico Files For Bankruptcy Protection In Largest Ever US Municipal Debt Restructuring

Update: PUERTO RICO FEDERAL BOARD FILES BANKRUPTCY CASE IN U.S. COURT

* * *

As per our report last night that following the expiration of the litigation freeze, Puerto Rico"s creditors had filed a barrage of lawsuits against the insolvent Commonwealth a bankruptcy was imminent,  moments ago Puerto Rico"s governor announced the commonwealth will request bankruptcy protection of a portion of the island"s $70 billion in debt, setting up a showdown with Wall Street firms owed billions of dollars, in what will be the largest-ever U.S. municipal debt restructuring and further complicating the U.S. territory’s efforts to pull itself out of a financial crisis.

The Puerto Rico restructuring would be far larger than Detroit’s record-setting bankruptcy, with little to no details how long a court proceeding would last or what cuts would are imposed on bondholders. The island’s financial recovery plan covers less than a quarter of the debt payments due over the next decade.

Cited by AP, Gov. Ricardo Rossello said Wednesday that a federal control board overseeing the island"s finances has agreed with his request to put the debts before a court. He told reporters that he has requested that the U.S. territory"s federal financial oversight board commence a Title III proceeding under last year"s Puerto Rico rescue law known as PROMESA. Title III is an in-court debt restructuring process similar to U.S. Bankruptcy.

"We have reached this decision because it protects the best interests of the people of Puerto Rico," Rossello said.

“The board has agreed to submit Title III protection immediately and they will submit it.”

According to the WSJ, "the governor said he would petition Puerto Rico’s federal oversight board to invoke a quasi-bankruptcy law that puts its standoff with creditors before a judge. His decision marks the start to what could be a lengthy legal fight as Wall Street watches closely to see how other indebted municipal governments may fare in confrontations with investors."

As a reminder, Puerto Rico and its agencies owe $73 billion to creditors, dwarfing the roughly $18 billion owed by the city of Detroit when it entered what was previously the largest municipal bankruptcy in 2013.

Finally, Bloomberg notes that the financial collapse promises to impose deep losses on bondholders who for years snapped up Puerto Rico’s securities, even as the government contended with a shrinking economy and chronic budget shortfalls. U.S. states can’t file for bankruptcy, and investors bought the bonds assured that it wasn’t a legal option for Puerto Rico either.

BBG further adds that Rossello’s latest offers to creditors last week shows the commonwealth believes general obligations should receive a better recovery than its sales-tax bonds. The latest proposal offered as much as 90 cents on the dollar to general-obligation bondholders. One such bond due in 2035, was among the most actively traded at a price of 66, up from 64.7 on Tuesday.

As The Puerto Rico Lawsuits Begin "A Bankruptcy Is A When, Not An If"

Last July, Puerto Rico defaulted on hundreds of millions in debt, however under the PROMESA federal rescue law put together in the last minute, creditor litigation was put on hold - a kind of deferred debtor protection without the actual bankruptcy. The law was meant to encourage Puerto Rico and its federal financial oversight board to negotiate debt-cutting agreements with creditors. No deals were reached and on midnight of May 1 into Tuesday, the litigation freeze expired, opening the doors for creditors to take Puerto Rico to court, in hopes of blocking the next step in the Puerto Rico restructuring, namely Governor Ricardo Rossello"s plan to impose drastic repayment cuts. As a reminder, Puerto Rico defaulted on $1.3 billion of principal owed since the previous governor declared the $70 billion public debt load unpayable in June 2015.

And as expected, on Tuesday Puerto Rico and its federal financial oversight board were flooded with the first lawsuits from stakeholders, with more expected in the coming days, which could ultimately push the insolvent U.S. territory into bankruptcy.  The lawsuits, according to Reuters, include complaints from holders of Puerto Rican sales-tax-backed debt, from general obligation bondholders and from bond insurer Ambac Assurance Corp.

• The first group, those holding sales-tax backed debt known as the COFINA bondholders, allege that the island"s debt-cutting plans violate the U.S. Constitution.


• The second group, those holding general obligation debt which is guaranteed by the island"s constitution, are demanding payment on $242.5 million of debt defaulted upon since July, including damages and interest of more than $102 million.


• Finally, there is Ambac which insures $2.2 billion of Puerto Rican bonds, and which filed four lawsuits, including two against the island"s government and another against U.S. Treasury Secretary Steven Mnuchin, seeking a lien on Puerto Rican rum taxes collected by the U.S. Treasury Department.

"Puerto Rico is no longer shielded from creditors rushing to the courthouse to lay claim to its assets - that includes the beaches, pieces of art, historical furniture and any assets whether they are nailed down or not. The people of Puerto Rico have had enough. The governor and the board have a moral imperative to act immediately" said Rep. Nydia Velazquez, a New York Democrat, who is calling on a federal control board overseeing Puerto Rico"s finances to seek a court-supervised debt restructuring similar to Chapter 9.

So with the lawsuits now pouring in, and with $70 billion in debt, a 45% poverty rate and near-insolvent public health and pension systems, the torrent of litigation could force Puerto Rico into a so-called Title III proceeding - an in-court debt-cutting process similar to U.S. bankruptcy. In fact, various experts cited by Reuters, see Title III as inevitable, the only question is when.

"At some point, Puerto Rico might run up against an adverse court ruling it would rather not have," said Keefe Bruyette & Woods analyst Chas Tyson, who follows Puerto Rico.

"I continue to think (bankruptcy) is a when, not an if."

Yet while the creditors can finally pursue their contractual rights, they will hardly win many supporters in the court of public opinion, as most of them are hedge funds, and who may have accumulated PR debt at prices below prevailing. For example, the COFINA plaintiffs include such hedge funds like Aurelius, Cyrus Capital and Tilden Park, best known for its founder Josh Birnbaum who in 2010 defended Goldman in the infamous Carl "Shitty Deal" Levin hearing. In a lawsuit filed in federal court in Puerto Rico, they collectively accuse the U.S. commonwealth, Rossello and other officials of "angling to repurpose the tax revenue earmarked to pay COFINA debt, which they say violates the due process clause of the U.S. Constitution."

Further, they ask the court to block Rossello from implementing a blueprint for fiscal turnaround that was approved by the oversight board in March. According to that plan, the island is forecast to only have $800 million a year to pay debt, or less than a quarter of what it owes, implying draconian haircuts for all bondholders.

Among Ambac"s lawsuits, two lodged complaints against the PR government, adding as defendants the island"s oversight board and the board"s seven members.The bond insurer, which may be on the hook should the island default, also aims to block not only the fiscal blueprint, but the filing of any Title III bankruptcy based on that blueprint. The insurer said in one lawsuit that Puerto Rico"s oversight board exacerbated the island"s abuses by "giving its imprimatur to an ongoing scheme ... that can only be called theft.”

AP puts things into perspective as follows: Puerto Rico could announce a historic, court-supervised restructuring for a portion of its $70 billion debt. By comparison, the U.S. city of Detroit had $9.3 billion of obligations when it filed for bankruptcy in 2013 in the biggest U.S. municipal bankruptcy ever. In fact, Puerto Rico"s situation is more dire than Detroit"s because the city, in part, had a firm set of rules in bankruptcy court, an option that the U.S. territory doesn"t have, said Greg Clark, head of municipal research at Debtwire.

Ahead of the May 1 deadline, the government on Saturday offered to pay 50 cents on the dollar to holders of general obligation and sales-tax bonds backed by Puerto Rico"s constitution. Bondholders rejected the offer.

But the biggest wildcard is what happens not so much to the creditors - who will be fine no matter the outcome - but to the ordinary people of Puerto Rico if the island does go bankrupt.  Puerto Rican officials have already imposed austerity measures, including cuts to worker benefits and pensions, and have said debt cuts are needed to spare the island from even more severe cuts to quality of life.

Two years ago we (and German finmin Wolfgang Schauble) joked that Puerto Rico could be the American Greece. Now with a Puerto Rico bankruptcy "only a question of when", it is unfortunately no longer a joke.

Puerto Rico Takes First Steps Toward Bankruptcy-ish Filing

After what has been the slowest of slow-motion train wrecks, Puerto Rico’s federal overseers have finally taken the inevitable first step toward considering the use of bankruptcy-ish proceedings, known as Title III, to allow the island to escape it"s $70 billion debt burden. 

Last year Puerto Rico was granted a 1-year temporary stay, courtesy of the so-called Promesa Act passed by Congress, that allowed protection from creditor proceedings in order to allow the debt-burdened island to negotiate a consensual agreement with bondholders.  That said, the stay expires on Monday and the government has struggled to make headway in negotiations with creditors.

With $70 billion of debt outstanding, Puerto Rico’s debt restructuring will be the largest ever for the $3.8 trillion municipal-bond market and is also expected to be among the most complicated as well with the commonwealth’s debt issued by more than a dozen agencies and backed by sometimes competing repayment pledges. 

As Bloomberg notes, the board also took steps to wind down the island"s government development bank which was used to finance multiple public projects but also defaulted on debt obligations.

Separately, the board approved winding down Puerto Rico’s government development bank, which financed public works on the island until it defaulted during the crisis, and increasing water rates as part of a plan to steady the Puerto Rico Aqueduct and Sewer Authority. Details of those fiscal proposals haven’t yet been released.

“This will provide a viable path for an orderly process for the Government Development Bank with the least impact for stakeholders involved,” said Elias Sanchez, Governor Ricardo Rossello’s representative on the federal board.

Of course, the shear size of bondholder losses are sure to make the restructuring process quite contentious.  The following $3.5 billion in 8% general obligation notes of 2035 were issued in March 2014 and have pretty much traded in one direction ever since. 

And while GO bonds currently trade hands in the mid-60s, Desmond Lachman of the American Enterprise Institute sees the ultimate recovery for bondholders being much more bleak courtesy of an economy that has been contracting since 2006 and shows few signs of picking up anytime in the near future.

It is difficult to overstate how desperate the present state of the Puerto Rican economy is. In each of the past 10 years, its economy has been contracting, and it is now more than 10-percent smaller than it was in 2006. Over the same period, more than 10 percent of its population has left the island for the mainland and its unemployment rate has risen to over 12 percent of its workforce.

Even before the slew of costly and disruptive creditor lawsuits that will almost surely follow the expiry of the U.S. Congress’ temporary stay on such suits next week, the island’s economic outlook was nothing short of grim. According to the Puerto Rican government’s own 10-year budget plan, which was approved by its Oversight Board, the island’s economy is projected to decline by more than 3 percent a year in 2018 and 2019 and by around 10 percent over the next five years.

In this context, it is striking that in Puerto Rico’s recent 10-year budget plan, which had the approval of its Oversight Board, the island would only make around one quarter of the debt service payments falling due over the next 10 years.

But at least a bunch of lawyers and investment bankers will make out pretty well.