William F. Santiago-Valles
“Debt is a transaction that [enslaves] through economic policies that justify military repression and the suspension of human rights.” Lazzarato and J. D. Jordan, Governing by Debt, 2015
This article examines the causes and consequences of current bankruptcies in Detroit, Puerto Rico and other colonies; identifies who profits from the debt and the resulting austerity and privatization measures, and suggests what we can do now—such as forming parallel institutions, creating research teams and alliances for direct action, especially boycott campaigns—to resist or “democratize the economic pain.” ⑴
We have to share the results of our research because the global economic-military crisis is too complicated for anyone alone to understand the relation between all its parts. According to my teacher Paulo Freire ⑵, our strategy must be to help each other identify our enemies, recognize what they have done to us, the ways they impose the conditions in which we live, and then ask what are we going to do now, to disorganize their economic-military-cultural-media regime? ⑶ Getting angry and whining are not substitutes for explaining the connections between causes and consequences, relying on research-based evidence and evaluating the effectiveness of direct action by organized groups.
We are in a global web of permanent war, gendered, racist, capitalist exploitation, and domestic colonialism. The United States operates as an empire, with colonies both abroad (Marianas, Virgin Islands, Puerto Rico) and within its borders (ghettos, barrios, First Nation reservations and trailer parks), denying those who live in these occupied territories the right to make the decisions affecting their daily lives. This is a monolithic world system where human rights are disregarded ⑷, characterized by daily police lynchings ⑸, a presidential assassination complex, genocidal austerity measures, and accumulation of corporate profit by dispossession of local communities. At every opportunity, we have to identify for each other both the operative causal relations and who profits from all the above ⑹.
In the world economy, monopolies require global control of natural resources, industrial technologies, investment capital, war machinery, commercial media, as well as knowledge production in the academic plantations where some of us earn our pay. One of the consequences of this system is that in 2017, of the world’s 7.6 billion people, 2.7 billion still live on less than $2.50 a day, which classifies as poverty, and 800 million must survive on less than $1.25 a day.
Since the U.S. defeat in Vietnam in 1975, the core of profit-making has moved from mining, agriculture, and industry to the credit/debt system. Corporate profit making now relies upon the following strategies: disempowering local governments, labor unions and social movements; privatization of public institutions; reduction of salaries—whether as wages, social services, or pensions; and reselling already paid for properties over and over again, as well as fabricating the illusion of future consumption. With the pretext of having to pay the public debt, unelected colonial administrators, called emergency managers here or the Fiscal Control Board in Puerto Rico, impose the same austerity measures that are imposed elsewhere by the World Bank on countries in Latin America, the International Monetary Fund on countries in Africa and Asia, and by the European Central Bank on Greece, Portugal, Ireland and Spain.
Such measures, designed to re-enslave and re-colonize, are leading to economic hardships and depressions around the world so severe as to lead to civil war: increased retail taxes, delayed retirement age, elimination of subsidies on smaller pensions, increased property taxes on homeowners; wide-scale foreclosures and evictions, increase in temporary work and job dismissals; restricted union negotiations, elimination of price controls (to reduce the value of wages), elimination of tariff walls, privatization of social services (water, electricity, housing, schooling, transportation, health care, pensions, prisons and cultural institutions); government employee cutbacks, and elimination of environmental laws and job safety inspections. In addition, the decisions of all popularly elected boards and councils have to be approved by the unelected, appointed overseers who are only accountable to the corporate owners of the public debt.
These austerity measures legalize theft of wages, homes, and public services that are supported by our taxes, but they do not explain how the public debt is structured to grow despite its being paid many times over, and to permanently re-colonize and re-enslave. There is a system called CAB, which multiplies the public debt because the unpaid interest is added to the principal owed every year. This system—outlawed in Italy, Switzerland and Ecuador, since 2008, but not inside the U.S. colonies, nor in the periphery of the global economy also being recolonized and re-enslaved by Germany, Canada, the U.S. and Japan—ensures that the public debt owned by the vulture funds will never be paid off. The term vulture funds refers to the investment banks that specialize in buying risky public debt below its formal price to later demand its payment at full price. For example, in Puerto Rico by 2006, the value of the public debt was 66% of all the merchandise and services produced in one year. By 2015, using the CAB system, the investment banks had increased the value of the public debt to more than 100% of all the merchandise and services produced that year, without including the sale of used goods and inflation. No doubt similar examples may be found in Detroit.
As these strategies are part of a global system, we must be prepared to challenge them from an international perspective by being informed concerning struggles around the world. Who inside the domestic colonies is following the work of the United Nations Independent Expert on Foreign Debt and Human Rights, Juan Pablo Bohaslavsky, or the Special Rapporteurs on the Right to Housing, Leilani Farha, Right to Food, Hilal Elver, Drinking Water and Sanitation, Leo Heller? Who among us is aware of instances of resistance in other countries? For example: If neither the loans that create the public debt nor the austerity measures that follow are approved by referendum after a public education process, why do working people have to pay the debt without a citizen audit? Not paying the public debt—which is what Malaysia, Iceland, Ecuador and Argentina did until 2016—seems like a rational alternative, especially when that debt was contracted to compensate for the absence of a progressive tax on wealth, and to rescue private banks, instead of improving public services.
In the next ten years African Americans and Latinos will be the electoral majority inside this global empire. In the next twenty-five years, together with Native Americans, Pacific Islanders and Asians, African Americans and Latinos will become the demographic majority. We need to use this time to identify our friends and practice coalitions and alliances with them around issues of mutual interest.
One such issue in which a transnational collaboration is possible could be a regional, national and international boycott, divestment and sanctions (BDS) campaign, against the investment banks that run not only in Chicago, Detroit and Puerto Rico, but also in places where structural unemployment, impoverishment and foreclosures oscillate between 38-68%—Pontiac, Michigan, Taylor, Michigan; Orange County and Oakland, California; Memphis, Milwaukee, Atlanta, Baltimore, Las Vegas, Tucson and Houston. Before undertaking a BDS, organizers would have to make every effort to ensure community self-sufficiency in food, energy, health, transportation, communications, and technology.
Given that the organized economic-military-cultural-media violence of any national government is fed with the taxes collected from interstate commerce, there is a history of organizers interrupting tax-collecting commerce with barricades, as in the 1871 Paris Commune; sit-down strikes, as in 1937 Flint; road blockades, like those carried our by the Occupy Movement in the port of Long Beach, CA in 2011; and boycotts, divestment and sanction campaigns, like those organized by the exiles from Ireland, 1916 to present, India, 1930s-40s, the U.S. Freedom Movement, 1920s-1960s, Palestine, since the 2002 Second Intifada, Chile, 1974-1990s, and South Africa, 1980s.
There is one thing that an independent Puerto Rico can do that Chicago or Detroit cannot, and that is to opt out of the dollar economy altogether with the help of the Economic Community of Latin America and the Caribbean (CELAC), the Bank of the South (ALBA), and the Asia Bank for Investments and Infrastructures (China, Russia, India, Iran). Social movements in Puerto Rico expect to be joined in a discussion of this option by other bankrupt U.S. colonies like the Virgin Islands, Guam, Samoa, and the Marianas, Martinique, Guadeloupe, and Cayenne (the French colonies); Curacao, Bonaire, St. Eustatius, St, Maarten, Saba (the Dutch colonies), and Anguilla, British Virgin Islands, Cayman, Montserrat, Turks & Caicos (the British colonies in the Caribbean). This option is being considered given the appearance, within the next five years, of a new international currency supported by gold reserves to compete against the unsupported U.S. dollar, the end of U.S. petroleum reserves in less than twenty years, as well as the economic crisis that is likely to continue for another thirty years. For evidence, see the folding of malls, impoverished suburbs across North America, and permanent unemployment inside the cities.
Here are some questions I propose for public discussion, which could also inform the future work of research teams that could be set up between Milwaukee, Chicago and Detroit:
- What is the rate of profit among the monopolies pillaging the domestic colonies? In Puerto Rico, monopolies double their investments every year.
- What is the connection between strategic objectives of these monopolies, and popular election results (which produce the banks’ accomplices)?
- How do the workers and permanently unemployed here in the U.S. explain their shared problems?
- Who profits from the decisions that negatively impact the daily lives of the workers and unemployed?
- How are U.S. social movements resisting austerity (with general strikes, non-payment of the debt, road blockades, and especially boycott-divestment-sanction campaigns)?
- What do people here need to know about how these matters are being investigated, taught and resolved in other bankrupt (domestic & off-shore) colonies of the U.S. empire (Virgin Islands, Samoa, Guam)?
- What kind of self-sufficiency demonstration projects (that cover food, energy, water, public safety, housing, schooling, health, courts) need to be established before a boycott-sanctions-divestment campaign against the vulture funds is possible?
- Who are the local accomplices of this global financial colonialism, where do they work, where do they meet, and what kind of public theater performance could be created to denounce them as economic war criminals?
The following chart present answers to some of these questions, as well as critical information on corporate ownership, debt and vulture funds for those interested in understanding and orchestrating collaborative, transnational resistance actions. There is a line from the film “Apocalypse Now” with which I would like to close: We vote for the “errand boys [and girls] sent by the grocery clerks to collect the bills,” but elections have not changed the power relations that let others make all the decisions governing every aspect of our lives. If elections effectively transformed relations of power, the dominant sectors of society would ban them. It’s up to us to invent and implement another way.
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|VULTURE FUNDS in P.R.
Specialize in debt difficult to collect
|PARTIES BRIBED||OTHER PRODUCTS & SERVICES OWNED
By each firm
|PART OF P.R. DEBT
CONTROLLED BY VULTURE FUNDS
|4. Michael Weinstock, Andrew Herenstein, Chris Santana: Monarch Alternative Capital en 535 Madison Ave. NYC
Part of Ad Hoc Group ($3.3 billion)
According to Investigative Journalism Center this is one of the principal vulture funds in P. R. Monarch is connected to Quadrangle Group (belongs to Steven Rattner, NYC banker) and to Debt Recuperation Lazard Fund (employed Antonio Weiss who worked for Federal Treasury Department in P.R.). Up to November 2015 they were unwilling to negotiate.
|Republicans: Marco Rubio (2016) who opposed bankruptcy protection fro Puerto Rico; and Ted Cruz.
Monarch invests in other political campaigns against federal minimum salary and tax collection
|Public debt in Greece, Argentina, Detroit, Spain, Portugal, & P.R. bought cheap to demand payment in full; Texas Rangers baseball team, Oneida Limited steel silverware, Hostess brand junk foods (like Twinkies) plus ARCH Coal Co.||$606,600,000.oo in general obligation bonds|
|5. Steve Shapiro: Goldentree Asset in 300 Park Ave., NYC are part of alliance against COFINA ($3.1 billion)||Invested in public debt Brazil, Argentina, Puerto Rico (COFINA & General Obligation bonds). Owns part of AMC Entertainment & Delta Airlines. Will invest in General Motors.||$587,253,141.oo in bonds over taxes to retail sales.|
|6. @ Mark Brodsky, Samuel Rubin, Eleazer klein, Jason Kaplan: Aurelius Capital in 535 Madison Ave., NYC. This enterprise profited at the rate of 138% from economic crisis in Argentina with Paul Singer. This team is also part of Ad-Hoc Group ($3.3 billion) against P.R. government. Until November 2015 they were not wiling to negotiate.||Republicans: Mitt Romney faction||Brodsky was an associate at Elliot Management with Paul Singer until 2005, with whom they removed judge end excluded victims of asbestos poisoning to increase profits in debt payments. This firm profited from economic wars against Argentina (whom they sued to collect ½ billion dollars), Greece, Brazil as well as against Chicago newspaper. Aurelius Capital was started with pension funds and foundation support. They are currently invested in the public debt of Greece, Detroit, Puerto Rico, Ukraine, and Congo-Brazaaville, Domiincan Republic, and Perú. The Co-operative Bank of Great Britain de Gran Bretana was forced to cede control to Aurelius.||$473,417,000.oo in General Obligation Bonds and from the Roads Authority.|
|The above information about the ten most powerful investment banks in Puerto Rico is the result of the work by Joel Cintron, Carla Minet, & Alex Hernandez from the Center for Investigative Journalism with Jessica Stites from In These Times published October 2017: see section http://periodismoinvestigativo.com/series/fondos-de-cobertura-y-fondos-buitre-en-puerto-rico/. There are others included below:|
|# Andrew Feldstein & James Stacey: Blue Mt. Capital are associates of Alliance Partners directed by Lee Sachs (ex-officer of Obama’s Treasury Department) with Larry Summers in Board of Directors. Advised by Jeremy Stein, ex-governor of Federal Reserve.
With Attorney Ted Olson (from Gibson, Dunn & Crutcher in Washington, D.C.), Blue Mt. sued the P.R. Electric Energy Administration to prevent debt restructuring.
|Democrats – Clinton faction. Also Governor Cuomo in N.Y who supports vulture funds
Blue Mt. supports privatization of public schools through Third Way think tank linked to Wall Street.
|Deuda Detroit y P.R.; asesor Prof. Jeremy Stein (Harvard) ex- Gobernador Reserva Federal||$400 MILLIONS in Electric Energy Authority bonds|
|VULTURE FUNDS in P.R.
Specialize in debt difficult to collect
|PARTIES BRIBED||OTHER PRODUCTS & SERVICES OWNED
By each firm
|PART OF P.R. DEBT
CONTROLED BY VULTURE FUNDS
|Greg Hanley, Alan Mintz, Paul Tudor Jones: Stone Lion Capital specialize in difficult to collect debt. According to Center for Investigative Journalism this is one of the principal vulture funds in P.R., and they plan to open a San Juan office to evade federal taxes.||Democrats – Clinton faction, and Governor Cuomo in N.Y.||Bankrupted Detroit & Jefferson County, Alabama; after 2015 junk bonds crisis, they had to suspend reimbursements to investors.|
|Jeffrey Gundlach de Double Line Capital continued to purchase dangerous debt at a discount even after November 2015.||Public debt of Argentina, Detroit, and P.R. (focusing on Public Employee Retirement Fund and municipal debt)|
|Mitchel Julis & Joshua Friedman: Canyon Capital||Public debt of Grecia, Argentina, Detroit
& P.R. as the firm’s investment strategy. Since 2012 Canyon Capital also invests in Andre Agassi’s (Iranian tennis professional) Venture Charter Schools.
|Howard Norowitz: Stone Lion Capital Partners. According to the Center for Investigative Journalism this is one of the main vulture funds in P.R. In the Spring of 2016 this firm had to return a great deal of money to their investors because of a liquidity shortage in the midst of the recurring crisis.||This group of U.S. millionaires who reside in P.R. protected by Law 20 & 22 , “invest” in the campaigns of politicians there.||Public debt of Detroit & P.R.|
|Donald Morgan de Brigade Capital Management . According to the Center for Investigative Journalism this is one of the principla vulture funds in P.R. and also part of coordinating of Ad-Hoc Group against P.R. Until November 2015 they were not willing to negotiate.||Invested in the public debet of Detroit & P.R. with funds from (New York City, New York State, Massachusetts, Rhode Island, Pennsylvania, Ohio, Maryland) pension systems.|
Fuentes: American Prospect, The Nation, Bloomberg, Centro Periodismo Investigativo P.R., The Guardian, www.Valuewalk.com The New Republic, Forbes, Hedgeclippers, Stephen Taub, The Hedgefund Report Card – Institutional Investors Alpha (2015), Center for Responsive Politics, www.Jubileedebt.org.uk , www.whistleblowwallstreet.com , www.huffingtonpost.com , www.taxjustice.net , www.rt.com/news, http://thinkprogress.org , https://protectpensions.org , https://armstrongeconomics.com, http://littlesis.org/news, www.businessnsider.com, http://latinousa.org http://www.democraticunderground.com http://www.commondreams.org/news, www.hedgeclippers.org , http://www.globlalresearch.org http://www.inthesetimes.com
|When Rahm Emmanuel was an assistant to Bill Clinton he earned an annual salary of $118,000.oo (U.S.). In the next two and a half years (2001-2003) without any previous financial experience, Emmanuel made $18 million in Bruce Wasserstein’s investment bank. This firm invested in New York magazine and in American Lawyer Media. According to Pando Daily, for the 2011 campaign, Emmanuel received a “donation” of $178,000.00 from the employees of Citadel Investment Bank plus an additional $200,000.oo from the owner of Citadel (Ken Griffin) in exchange for a commitment to repress Chicago’s teachers union, raid the municipal employee’s pension fund, and put an end to the labor conflict ant the South Loop’s Marriot Hotel. That same Ken Griffin donated an extra million dollars to Emmanuel’s re-election and over ten times that to elect Governor Rauner (R-ILL). According to Good Jobs First ( April 2014), the reduction of the public employee’s pension is not only necessary to compensate for the regressive taxes and corporate subsidies, but above all to invest the funds – not paid out in pensions – with the vulture funds, in a city where municipal bonds have been classified as junk since May 2015.|
1 See Dr. Martin Luther King, Jr.’s April 1968 Memphis speech.
2 Author of Pedagogy of the Oppressed.
3 See the writings of Amilcar Cabral, C.LR. James, Cedric Robinson, Walter Rodney and Harold Wolpe.
4 No habeas corpus or posse comitatus.
5 See MXGM, Ghetto Storm, 2011 and the Washington Post web page.
6 See Robert L. Allen, Samir Amin, Barbara Arneil, Frantz Fanon, A. Sivanandan.