[Editorial] Just Another Manic Monday?
SAN JUAN — Although the mass protest now being called Black Monday—a march organized by workers’ unions, social groups, religious institutions and people of every political stripe—rallied some 60,000 workers who converged on Hato Rey’s Golden Mile on May 1, we do not yet know for certain who was behind the destruction of property by several hundred protestors. We saw that what started as a mostly peaceful protest conducted in an orderly fashion evolved into chaos when protestors, who have yet to be linked with the organizers of the Paro Nacional, took to breaking storefront windows and vandalizing property. To whom are these people tied? Who do they represent and what is the effect they seek?
No sooner had the damage been done when Banco Popular Executive Chairman Richard Carrión was filing suit against the perpetrators of those acts, which Carrión estimates to have been in the vicinity of 500 strong—an angry mob that caused up to $1 million in damages by some estimates.
With those acts, the Anti-Fortune 500 left the impression that there are plenty of folks who are angry at having to suffer the brunt of looming austerity measures that are intended to appease holders of Puerto Rico bonds. And creditors have grievances of their own with the administration of Gov. Ricardo Rosselló, who sent most credits down a path to haircuts under Title III of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa).
Breaking things will likely not do the trick. It was the sort of civil unrest that has the effect of damaging Puerto Rico’s value proposition at a juncture when the island’s resources are tapped.
In special coverage from Washington, D.C., this newspaper listened to former Detroit Emergency Manager Kevyn Orr’s concerns over the impact of civil unrest on a jurisdiction’s value proposition. Orr explained that Detroit’s ability to keep unrest at bay helped to maintain the city’s value proposition when it came time to negotiate away some of that municipality’s assets. This way, Orr was able to deal several key assets to monoline bond insurers Syncora and Fidge. What assets will the Rosselló administration bundle for sale when monoline bond insurers Ambac and Assured come calling to offset the debt they are wrapping? And will the people sit idly by in a nano-combative stance?
Although this newspaper supports the right to peaceful protest, we do not condone acts of violence or impeding fellow citizens from their right to differences of opinion. By and large, the members of Puerto Rico’s business community have rejected the acts of violence—as have observers from the financial community watching from afar. The question remains: “Who is driving the violence on the fringe?” Ojo.
Another very important thing that Orr said during the D.C. conference was that the truth suffers tremendously in this initial stage. It is characterized by fast and furious news, most which is inaccurate. This is where we have to be most cautious and vigilant, for there are so many interests in this credit crisis that have set spin on a path to hypermitosis.
You have Senior Sales Tax Financing Corp. (Cofina) creditors and general-obligation bondholders sending salvos at each other via press releases and through emissaries carrying their “my credit is better than your credit” rant. The Bonistas del Patio, mostly local creditors possessing more than $15 billion in Puerto Rico bonds, have denounced the devastating impact that the default will have on this economy as many pensioners with weaker credits would be left in the lurch. The Bonistas top brass estimate that huge haircuts to those local bondholders will cost the economy billions.
Orr said it loud and clear: “There is pain coming and nobody is going to like it”—not the creditors, not the pensioners, not the workers. As we witness unrest, we denounce violence and promise to remain vigilant. This newspaper will ask questions: Do the Koch brothers lurk somewhere, layers beneath the protests? Is George Soros, as has been suggested, hunkered in a bunker somewhere, deep below, hoping the smoke of conflagration will help mask the hedgie assault? Those are questions that must be answered as we muddle through this painful process.