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[Annotation] The Stolen Homeland

When I think of my home country Germany, it makes me feel really good. Even or maybe because I have left it almost 14 years ago when I chose Puerto Rico as my homeland of choice. The “fatherland” is much more than a geographic location to me. It is the views of lakes, forests and mountains of my youth, the sausages and beers that have no equal anywhere in the world, the smells of Sauerkraut or fresh bread just around the corner or sitting in a Beer Garden under majestic trees; “patria” is memories, songs and friends, the attitude of helping each other and always being willing to work and produce the best result; but also graves of grandfathers who had both been Prisoners of War and grandmothers, who raised children on their own under extremely difficult circumstances after the second world war that left the country in ruins. It is the history of a country that has overcome total destruction in a war and risen to the top of the world’s economies, a country and persons that I owe an education, attitudes and growing up safely to achieve personal success beyond belief. But most importantly, my native country became only then so important to me, once I had moved away and been living in Puerto Rico already for many years. It became only so important, once it was gone.

I wonder what will be the memories of my kids, both “BoricuAlemans,” when they look back on Puerto Rico’s history two decades from now?

And I wonder if the island’s residents feel deep inside that this last straw broke the camel’s neck and has forever taken their native Puerto Rico from them. Something that not even the decades old complaints about the disadvantages of the (basically) two party system, billions and billions of dollars in debt or a fiscal control board have managed. The recent high profile alleged corruption case with the Telegram-Gate have struck the accord of great loss in many a Puerto Rican soul. So much so that it lit an emotional firework that is far from over. 

In 2017, President Barack Obama participated in an event in Brazil and was asked, which advice he would give a country immersed in an unprecedented political and economic crisis and he responded:  “In many countries, people say they hate politicians and government, but the politicians and government are reflections of ourselves. If a society is healthy, politics will also be. If a society is sick, politics will be.”

I still have trouble to believe the disgusting tone in and conclusions I am forced to draw from the Telegram Chat. It troubles me even more because through my work I have gotten to know some of the participants and simply cannot believe that those persons, professionals, could have been involved in the kind of bullying on display or any corrupt dealings. No matter whom I talk to, that sentiment is similar. And maybe exactly that is why we can all together regain and heal this place: because we all agree that those old ways of backroom dealings, bullying by perceived elites and more, for which the chat is just but a symbol, are the root of all evil!

We are experiencing an extraordinary moment of Puerto Rico’s history. One of those make it or break it moments, where the real question is above all where do we go from here!?

Albert Einstein defined insanity once as continuing to do the same things and expecting different results. To have different results, we need to do things in different ways. Those old ways need to stop and we all need to start doing things differently; do the right things and do them right. Not tomorrow, not by announcing them, but simply by doing them, NOW. It starts with the Governor taking the only reasonable consequence and resign as painful as it may be. It continues with his colleagues on both sides of the aisle to start cooperating beyond party lines or personal interests. And then it must not stop: we must come together as one people, work hand in hand, think outside of all boxes, in order to rise from these ashes and build the future we want for Puerto Rico. 

Santurce es Ley

Editor’s note: The following originally appeared in the Jan. 31 – Feb. 6, 2019, issue of Caribbean Business.

Public art has been emerging for years in various urban areas of Puerto Rico. It is especially manifest in San Juan, in the Santurce and Río Piedras districts. Various pieces have been created by recognized artists and others by emerging artists who focus on the artistic specialization of the moment.

It is known that in other cities, such as Los Angeles and Berlin, works of this nature stand out and are well-received as an urban artistic example of the times.

Multiple books on this type of art have been published, where its importance among several other traditional forms is already recognized. In Puerto Rico, there were times when graffiti was rejected as a valuable artistic process and has sometimes been destroyed or vandalized. We still see this attack on public art when more daring visuals are exhibited.

However, of note is that as a result of the establishment of Santurce es Ley, public art has been promulgated as a banner of contemporary and Puerto Rican art. By visiting the area around Cerra Street in Santurce, one can enjoy remarkable artistic variety that is well-executed, with phenomenal creativity—an artistic example that compares with the best in the world.

We are publishing photos by Augusto Ferrer of some of these works for our readers to enjoy. Surely, they will find that they are magnificent and Santurce es Ley deserves public support, which can continue the effort to spread the word about our public art.

There are those who suggest this area of Santurce should be recognized as a potential tourism focus, as is the case in several other cities, and an effort to improve the area’s infrastructure should be carried out. There are valid reasons to establish Santurce as an art enclave that is focused on internationally.

We invite you to walk the streets around Calle Cerra for a close-up experience of what artists, both Puerto Rican and guests from abroad, have to offer.

Photos by Augusto Ferrer: 

[Annotation] Make it rain, Gerardo!

Editor’s note: The following originally appeared in the Sept. 6, 2018, issue of Caribbean Business.

ith public indebtedness at the highest levels, not just in Puerto Rico but in most advanced economies across the world, the immediate and logical solution is the sale of assets owned by the government. Call it privatization, call it monetization of assets, call it as you wish: It is always about converting something that you own (and may not necessarily need) into cash, for example, to pay off some of the debt.

While I agree in principle with those who say some of a government’s assets should never be sold, given the amounts of debt in play, I, personally, would rather have it all on the table. Touch even the most precious of the “golden cows.” Most governments, however, are reluctant to explore some opportunities to raise revenue. In Puerto Rico, this has led to some obvious projects not being touched or being touched in a mainly public relations way but without a real concept or vision. Most of the time, because it might face opposition. And God forbid, a politician would touch a project that not everybody might like, but it is the right thing to do!

If you personally were heavily in debt and, on the other hand, had some properties you could sell, you wouldn’t think twice but get on with it and sell them. Erasing debt, the pest of our times, is nothing to be done with emotion—it’s done with cash. And to establish a Chief Investment Officer (CIO) for Puerto Rico to facilitate the creation of that cash is a good idea. But it cannot stop there. Gerardo Portela, the CIO of the Government of Puerto Rico, now needs constant empowerment by the Governor, to whom he reports directly, so the colleagues of this administration understand the importance and opportunity with this appointment and, more importantly, so he will be granted some leeway to do things differently, go for some quick wins and touch the “golden cows” in new ways.

Just looking at a few opportunities that come to mind and strictly looking for the low-hanging fruit—from such assets as land or real estate that could be easily sold, zoned or rezoned—permitted by a task force right there at the CIO’s office is positive. And, all of that, combined with the private sector’s profit-seeking behavior in general, this one office could become a key component to solving the puzzle that is Puerto Rico’s economic future.

Portela’s No. 1 task should be to focus exclusively on facilitating the monetization and produce cash from it, combined with identifying where opportunities are. In any investment banking boutique firm in the private sector, one would (1) start with producing an inventory of assets. Then (2) scan through that inventory and define a shortlist of opportunities. (3) Add to that shortlist the opportunities that the private sector will bring to the CIO’s office anyway, and you’ll end up with a list of projects that can be started immediately. Then (4) categorize them into high priorities, “quick wins,” and don’t shy away from complicated undertakings. Lastly, get your task force to work and help them get all necessary permits, etc. and step aside so the private sector does its work.

[Annotation] The Modern-Day Robbers

Editor’s note: The following originally appeared in the Aug. 16-23, 2018, issue of Caribbean Business.

For everybody who paid his or her business-interruption insurance in the past on time, in many cases for years without needing it, the ridiculous game that insurers are playing in Puerto Rico must almost seem like fraud. In law, fraud is defined as a deliberate deception to secure unfair or unlawful gain. At least from where I sit, where the livelihoods of hundreds of people depend on an insurance company to simply do what they said they would, it sure looks like that!

Anybody who intentionally provides a client a proposal to do something if A, B or C happens, and takes that client’s money for it, and then comes up with 100 hurdles and excuses at the moment of truth, should not only lose his or her license to be in that business, but should go to jail. It’s modern-day robbery. An aggravating circumstance in the case of business-interruption insurance is that once you need it, some catastrophe has already happened to you. In the case of Puerto Rico, the aftermath of two major hurricanes is worse than the actual hurricanes.

Whereas the law makes a distinction between “unintentional” manslaughter and intentional murder in different degrees, nothing comparable exists in the insurance industry. The insurance companies can propose a policy with premeditation and malice, hidden from you when you sign, and silently commit their deed by delaying your claim once you call upon them, and thus they get away with murder, metaphorically speaking.

It is a pity, and every single person participating in that scheme should wear shame hats when stepping onto the streets anywhere. The bet of all these white-collar robbers is that if they only delay long enough, one will get more and more desperate and, at one point, accept a fraction of what the rightful claim is—and the gain is theirs. I’m not even saying they should have an obligation to accept whatever a client presents, but what good is it to show up with a plastic spoon for a gunfight? The insurance companies have all advantages on their side.

In a very concrete case, a team of several people under the guidance of CPAs, lawyers and seasoned executives has worked for months on end to present the case exactly according to the instructions of the insurance company’s adjuster, to then have it taken apart and be offered the misery of less than 30 percent of the claim. That adjuster, some CPA paid by the insurance company, has the right to question every single assumption or conclusion just based on his gut feeling—whereas the client isn’t even awarded the opportunity to argue logically. In that case, positive numbers from a period after the hurricanes, which would be working against the insurance company’s goal to minimize the claim, will at best find their way into a footnote of the adjuster’s report. The balance of power and the entire process are out of whack, so the insurers have all the power; the clients have none.

A portrait of Bernard Madoff, the financier convicted for running possibly the largest Ponzi scheme in history. (Abode of Chaos on

In our case, we’re going down the road of litigation with full force now and have found what we think is the very best representation available in the United States, with an armada of lawyers and consultants. After consultation with that new counsel, we believe more than ever that we have a very strong case. Did it have to be that way? Not from our end. But after unreturned calls, emails and canceled meetings, excuses and more excuses for months, and then offering an insulting fraction of our claim, all that salted with a taste of arrogance, the insurance company left us no other option.

Unfortunately, that ruling in our favor down the road will not even bother them—with what they have made from deferring our and all other payouts, they and their accomplices will always come out OK. I estimate that for every $100 million in deferred claims, the insurance companies make at the very least $400,000 per month, and more likely than not, much more than that. And the claims totals are in the billions. Unless they receive a real threat to THEIR business continuity and schemes, they will continue pocketing that dough no matter the damage to their clients, individual companies and the island, exactly like any other robber would not care about the damage caused to his victim.

It’s still Groundhog Day

nother 1st of May, the same pictures. Many demonstrating on the streets, a few starting a violent fight with the authorities. Demonstrations and other expressions of opinions are a fundamental democratic right, no question. But every right should have its limitation when it limits the rights of others. And I’m not even talking about the inconveniences caused for anybody trying to get to work in Hato Rey or the hundreds of offices that simply didn’t open yesterday. I’m talking about how a few black sheep make us look to the outside world, to the people who consider(ed) coming to Puerto Rico as tourists or doing business. It is difficult enough to compete with other destinations for vacations and business or investment.

If we continue to present ourselves like a banana republic, things will only become more difficult. The only defense we have in how we are being perceived in difficult situations, where people are throwing stones and other stuff to hurt police and others, is the police presence.

My measure is the number of emails I receive from friends and business partners all over the world, once it happens. Last year, I received almost 200. This year, I received about a quarter of that number. Not because I have so drastically fewer friends or business partners, but people outside saw that we indeed do have a police force that acts on behalf of the peaceful citizens to uphold law and order. That was also reflected in the tone of those messages. Especially the German faction, which was utterly impressed by a police force acting with determination, and I congratulate Police Superintendent Héctor Pesquera and interim Police Commissioner Henry Escalera for both concept and implementation. Even more so, I urge you to encourage the police women and men of Puerto Rico to wear their uniforms with pride and be present. That was in fact the first thing I noticed in the morning when driving onto the expressway: Presence!

Contrary to other days, I counted 20 police officers during a 10-minute drive. That’s how it should be, when everybody, every day agrees there are just too many traffic violations. Loud cars passing by at mind-blowing speeds, everybody on the phone, women putting on makeup, others using lanes going against the traffic. Yesterday, with just “the presence,” I didn’t see any of that.

Back to the demonstration. I personally don’t think anybody achieves anything by running around on the streets carrying signs and causing inconveniences for the rest of us, but again, if done within commonly agreed-upon rules, so be it. But I can’t but wonder where the concrete proposals are from the demonstrators, what are their propositions to resolve any of the pressing financial issues that the administration is dealing with? My point being that in a past demonstration, a business partner got out of his car when a road had been illegally and entirely blocked. He walked toward the crowd and started a conversation with some of them—or at least he tried to. But it became obvious, very fast, that there wasn’t really much to discuss, and those individuals only repeated phrases, while they also noticed they didn’t even know the details about the topic they were demonstrating for.

This entire scenario reminds me very much of the extreme history of my homeland, in Germany. In addition, few people manipulated the masses there to their benefit. Here in my chosen homeland, there exists a pattern of self-sabotage. A few in the background manipulate many to go out and carry signs and scream and jump in the streets and demonstrate for something that cannot be solved by demonstrating but through ideas, creating concrete solutions, debating them with different stakeholders. Unfortunately, they even manage to heat up a small group who does so with violence.

If we want a future in Puerto Rico, we have to stop waiting for the big uncle with the checkbook. He has his own problems. We have to stop blindly following ideologies and start acting constructively and doing the right thing even if maybe nobody’s watching. But I do assure you, the world is watching, and establishing law and order with zero tolerance for terrorists is a great first step. Doing the same things again and again, and expecting different results, equals insanity. In that sense, let’s start doing things differently from how they have been done—and start with establishing law and order; an adherence to the rules is a good place to begin for a stable island and a basis for the future.

[Annotation] To Infinity and Beyond

Editor’s note: The following originally appeared in the December 14 print edition of Caribbean Business.

For many years, people have again and again told me stories about Hurricane Georges in Puerto Rico, which had passed in 1998. Not in my wildest dreams had I imagined to ever live through anything similar. In Germany, where I grew up, the extremes of natural events simply aren’t that extreme. So then, Irma and María came along.

Life after María in Puerto Rico will never be the same again for a very long time. Not only did two major hurricanes pass by and over the island, but the aftermath is actually worse than the hurricanes.

Between offers from the financial institutions that will only postpone a catastrophe for many into next year instead of helping by adding the months gained at the end of mortgage contracts, insurance companies taking a long time from receiving a claim to the actual payout or a potential taxation of exports from Puerto Rico in the future—the aftermath is worse! If we don’t soon create a solid perspective addressing all of the above, this will pose the greatest threat to exodus and business, in an unimagined dimension!

Where insult gets added to injury is the insurance business. Even if one did everything right, you might be inundated by requests for information, and then, more information and creative ways on how to calculate what the insurance should actually pay you, in a manner to postpone payout as long as possible, to then negotiate once more and pay less. Is that still constructive?

We, at Latin Media House, have been feeling this ourselves. María made it impossible for us to move back into and report from our existing facilities in Santurce. No electricity from Prepa, the substations on the roof destroyed, also the condensers for the air conditioners, no phone or internet connectivity, soon the smell of fungus spread in the hot, humid air throughout the entire building—and not even a forecast to get any of this fixed any time soon. Show me how you can produce a newspaper or a magazine or even a website with a well-researched article—anywhere in the world—without all of the above!

So, in coordination with our great insurance brokers and countless hours of legwork, we made it possible to move to a new location, which at some point next year would have happened anyway—still far away from being operational but at least our stuff is there.

In hindsight our actions were confirmed. By the date of this publication, reparation of what are now our former buildings has not even started. So, again, we did the right thing and kept on relying on having the claims that our finance department had worked on during another set of countless hours, to be quickly processed, leading to the payout for which one pays the business interruption insurance.

They are still “adjusting” and “calculating,” and one feels as if we are asking for something that wasn’t ours, but is exactly what we paid a hefty insurance premium for. All of that is while I think our publications provide an essential public service by informing you about what’s going on.

If you had similar difficult experiences with your insurance, we’d like to learn about it; please write us in strict confidentiality to Eva Lloréns interviewed the Insurance Commissioner for you; read about it on page 9.

Insurance Losses Could Lead to Hike in Reinsurance Rates

During this entire time, and with the gracious help of Jon Borschow and the Foundation for Puerto Rico, we found a way to place at least a skeleton crew of our editors in their offices, to feed our websites with news and background for you.

Some say this has been the best coverage about what’s going on. I say, the storm has not only brought out the worst, but also the best in people, which we want to point at in our “Unsung Heroes.”

This, too, shall pass and we’ll all come back stronger from this. But for future generations, Maria will dominate the stories about the island. Caribbean Business will be there to inform you. We are back.

Person of the Year: Maria’s Unsung Heroes


[Annotation] The People Have Spoken

(Rafelli González/CB)

The people ruled and it doesn’t matter how many of them.

The word “democracy” has its origins in the Greek word demokratia, meaning “popular government,” from “demos” = “common people” and “kratos” = “rule, strength.”

The people rule. And they rule by voting. The voting can be for persons or on topics, and essentially it is indicated when there are competing options about which to decide.

In the case of Puerto Rico, there was a chance for everybody, from each and any political color, to choose from several competing options on the “papeleta” and actively express their opinion.

Over 500,000 people, of the more than 2.2 million inscribed to vote, made the effort to vote and express which option for the island’s future they favor. While in itself, that is a high number, it is at the same time only roughly one-fifth of all voters.

A low turnout has no direct connection to legitimacy, however, if people were free to attend. Just because someone chooses not to vote, doesn’t mean that a person who actually executed the vote, should not be counted. And to assume that everybody who didn’t vote was against statehood or the current government, is about as alternative a fact as it gets. But in times with a president like the one in the United States, it appears one may just say about anything.

With basically every political party claiming the victory in the referendum, or the destruction of the others, that points more clearly to what the actual problem is: people are tired of politicians and their games. But that doesn’t have much to do with the result of the referendum being a reality.

Coming back to Puerto Rico’s referendum this past Sunday, June 11, 2017, everybody had the chance to register on time as a voter, to participate in the referendum and thus express their opinion and make sure their vote counted. By abstaining, you can’t express anything.

In my humble opinion, by not voting, you don’t boycott anything but passively agree to whatever is the voting majority’s favorite choice. Pretty much like a gym membership: you keep on paying the membership while the only duty of the gym owner is to basically just keep the doors open. If you don’t go, you can’t ask for your money back and have lost the right to complain about your “pipa.”

If anybody wanted to show what the “opinion of the people” is, they should have done so by voting for one of the options on the form.

As sort of a disclaimer: I’m as German as a German oak tree, I do live voluntarily in Puerto Rico and still have two small children here, who may or may not live here once they are adults. But if they do, I hope for them that the island will be in better condition than it now is. Which party wins what, or whether statehood or not, all of that to me is secondary. But I do know that to have a brighter future in Puerto Rico and bring a certain prosperity (back) to this island, it wouldn’t harm us to adopt some of the German traits that rebuilt a country completely in ruins after the Second World War. We all, collectively, need to be more serious, take responsibility and follow rules, where they exist. If the elected officials started with that—and stop playing political games—it wouldn’t be the worst example they could provide.

“Democracy implies that the man [& woman] must take the responsibility for choosing his [or her] rulers and representatives, and for the maintenance of his [or her] own ‘rights’ against the possible and probable encroachments of the government, which he [or she] has sanctioned to act for him [or her] in public matters.”

—Ezra Pound, “ABC of Economics,” 1933

Let’s Avoid Total Annihilation

Miguel Ferrer, chairman Ferrer Faass & Co

Caribbean Business Publisher Miguel A. Ferrer

The Fiscal Plan proposed by the administration of Gov. Ricardo Rosselló and approved by the Financial Oversight & Management Board unfortunately includes a powerful time bomb that can cause devastating effects on Puerto Rico’s society and economy.

The plan was elaborated by deducting “essential” services from the $19 billion in revenues available to the government, leaving the remainder for debt service. The debt service was deemed a nonessential item.

The point of this op-ed piece is to dispute that strategy and propose that Puerto Rico bondholders also be treated as an essential item in the fiscal process.

I applaud the need for the fiscal plan to “embark on a transformative journey in order to provide core services to citizens in an efficient and fiscally responsible manner,” as was presented by the Rosselló administration. Structuring a balanced fiscal plan in the short period requested is in itself a welcomed accomplishment. In the dire straits the government finds itself, I am ready to heed the call for “sacrifice.” Not expected was that bondholders in Puerto Rico are to take the brunt of the blow. In one sweeping motion, the plan wipes away $11.4 billion of their capital.

Few people realize what bondholders are experiencing. The debt service for 2017 is $3.3 billion, yet the fiscal plan provides $818 million for debt service this year. In 2018, the amount is halved to $404 million for a debt service of $3.8 billion. Therefore, during the first year, bondholders receive a 75% cut, and the second year shows cuts of 89%. Over 10 years, proposed cuts equal 76%. No other group or sector is required to assume such sacrifice.

The 60,000 bondholders in Puerto Rico who still have bond investments of $15 billion, in one crushing moment stand to lose $11.4 billion of their capital. Add to this blow the hardships of losing about $685 million in annual interest payments, $6.85 billion over 10 years, and we realize the immensity of this financial wipeout. There is no equivalent for that kind of monetary loss in Puerto Rican history. This severe blow will cause massive disruption in our society and cripple our economy.

The Puerto Rico “ahorristas” are as vulnerable a group, and as essential an item as those included in the “protected costs” of the fiscal plan. They must be afforded that same financial consideration—not monetary annihilation.

Let’s put a face on it. Take doña Pancha, an 80-year-old retired clerk, who worked 45 years and saved $100,000 to complement her social security. As many others, she invested her savings in Puerto Rico bonds. For years, she received interest income of $6,000, or $500 a month. This plan blows away $76,000 of her $100,000 investment. Her principal would be reduced to $24,000, her interest income (at 6%) would drop to $1,440 per year, or just $120 a month. She cannot pay her utilities with that amount, let alone purchase medication. Doña Pancha, an imaginary example based on a construct of real cases, not only will lose $76,000 of her investment but also $45,600 of income during the next 10 years.Doña Pancha faces a miserable future. Again, no other group is being required to sacrifice so much—not the government apparatus, not the University of P.R., not the pensioners and, certainly, not the government employees.

(Juan J. Rodríguez / CB)

(Juan J. Rodríguez / CB)

For the 60,000 Puerto Rican bondholders affected by these Draconian cuts, it can get worse. The cuts to bondholders are of such magnitude that I do not foresee a successful negotiation. Instead, I expect the powerful investor groups will fight to the bitter end in court. These are the large institutional fund managers and hedge funds. General-obligation (GO) bondholders with their Constitutional protections and Cofina (Sales Tax Financing Corp.) bondholders with their securitization guarantees have solid legal ground on which to stand. With only $800 million for debt service, the likely scenario is that it will probably all be paid to GO and Cofina bondholders, with nothing left for the other lesser credits, which comprise the majority of local holdings. Puerto Rican bondholders will be at the bottom of the pile. Most likely they may not even get 24¢ on the dollar. They may lose all their investment, which for most local bondholders is the equivalent of their life savings, and they will be left with no investment income.

Aside from the devastating effect these cuts will have on local bondholders and the economy, an unintended consequence is that it will forever eliminate the possibility of a local capital market for Puerto Rico bonds. For years, the local market provided funding for many a crucial project as well as for sustaining our government structures.

The size of these cuts also will damage our capacity to return to the U.S. bond market. Without access to capital, the possibility of building and rebuilding our infrastructure and economy will be severely limited.

There is talk about the possibility that through legislation local bondholders will be offered tax credits to recover part of these huge capital losses, but nothing to recover lost income. I acknowledge this effort from the Rosselló administration as a positive step to address the disaster facing Puerto Rico’s “ahorristas,” but consider it totally inadequate to attend to the magnitude of the financial wound.

Most people understand we need to address our fiscal crisis as soon as possible, in realistic terms. However, we must distribute the pain more evenly before we do lasting harm to our people, our society and our economy. As I have said before, let’s avoid destroying the economy to save the government. We certainly must not entertain the notion of the total annihilation of our local capital base.

Statue of Liberty Under Suicide Watch

Frédéric Auguste Bartholdi and Gustave Eiffel must be turning in their graves these days. Bartholdi designed and Eiffel built the Statue of Liberty in 1886 as France’s gift to the United States and, since then, it has become the welcoming sight for millions of immigrants arriving in the land of freedom—in a nation of immigrants.

I’m an immigrant from Germany, even though I immigrated directly to Puerto Rico—and even the mother of today’s POTUS is an immigrant: Mary Anne MacLeod boarded the S.S. Transylvania in Glasgow, Scotland, in November 1929.

But Mr. Trump the President continues much the way Mr. Trump the businessman did: hyperbolic exaggerations and lies where suitable; favoring personal interests and of course, attacking anyone with a different opinion instead of conducting an educated debate.

untitledThere is no surprise in that the mostly Muslim countries where Trump Enterprises has business interests have been excluded from the new list of countries with visitation restrictions. I’m not saying they should have been included, but the Executive Order with visitation restrictions comes under the headline of a war against terrorism and excludes countries where actual terrorists came from. And the first casualties of the ban are the weakest of the weak, people on the run from their home countries. As The Economist states: “In the past 40 years there has not been a single fatal terrorist attack in America carried out by anyone belonging to the seven nationalities targeted by the order.”

Much of this was visible during Trump’s electoral campaign; much of it could have been seen as soon as the president-elect started having meetings where the very children running his business now, participate for no reason other than expanding the company’s network. The Washington Post has started a continuing article showing exactly when and how the U.S. president is lying. In the best case, as some German media suggest, he is just not informed. In the worst case, there is someone at the White House, equipped with nuclear rocket codes and the world’s largest military, who is sufficiently thin-skinned and narcissistic, to drive the world into a war over who is right in any given argument. As the editor in chief of German “Handelsblatt” called him: “an incarnate Molotov-cocktail thrown into the White House.”

In the 11 years since I immigrated to Puerto Rico, never once has anybody questioned me about my religion or made my religion a criteria for doing business or for opening the doors to their houses. Clearly, our island has problems in many areas. But even as an immigrant, I was allowed to live freely and do as I please. And I even made friends.

In light of the extremism being displayed now, as the policy of the new USA, I’m somehow glad that I can’t even imagine how this would bide with Puerto Ricans. Reading about the daily barbarities from the [U.S.] mainland convinced me that Puerto Rico has to reflect more on its own strengths and advantages than ever before. How can we make being different an advantage? What is our unique selling proposition?

I am glad that Gov. Ricardo Rosselló repudiated the immigration ban, that he found clear words about it, instead of more of the typical political blah blah. Kudos! That’s what we need on all issues: the candor to have an opinion, debate and change it, if necessary. And all without the need to destroy an opponent. Without exaggeration, without politiquería, just saying things as they are and acting upon it. Combine that with proactively selling Puerto Rico’s advantages and we’ll be an irresistible location for life and business without even having to try to compete with cheap manufacturing locations around the world. Let’s make an effort to stress how welcoming we are, how great it is to live all year long in summer and what a great and educated workforce we have. People will want to stay voluntarily, like I did, and do business here. In other words, we need to do pretty much the opposite of everything President Trump is doing for our island to bloom again. Given the USA’s new direction, we could probably even get a bargain deal for the Statue of Liberty and just bring it down to San Juan.

Publisher’s Letter

Dear Readers:

Much to my dismay, the process of restructuring Puerto Rico’s debt is moving toward what I believe is a disastrous path for local bondholders and for the economy as a whole. This issue, which I submit needs to be understood by all Puerto Ricans, causes me to address you as Publisher of Caribbean Business, something that I had hoped to significantly limit or avoid altogether. The situation, as I see it, is that local bondholders have been placed at the bottom of the structuring pyramid so that the offer they will receive consists of a near wipeout of their investments.

The restructuring, apart from the disastrous effect on their individual financial well-being, is also devastating to the Puerto Rican economy, at a time when we have been suffering from a 10-year recession. Assuming local bondholders still hold $15 billion in local bonds (from an estimate of $22 billion held until 2014-2015) and they received but 40% of their principal, this loss of principal equates to $9 billion in real losses, as distinct from the present paper losses, which by themselves are caused by the ongoing bad publicity on Puerto Rico’s fiscal woes.

The loss of current interest payments is also a crucial matter not being given appropriate weight. At 5% average coupon, the foregone income proposed erases $750 million of income from the bondholders’ pockets with the concomitant effects on the economy itself.

There are other ways to restructure Puerto Rico’s fiscal black hole so bondholders do not assume the main burden of getting Puerto Rico back on its feet and, thus, not suffer their investments going by the wayside.

All constituents involved need to shoulder this Puerto Rico problem, that is the taxpayers, the pension plans, the government and the bondholders, plus those individual government entities that are being rescued.

Overall, the proposal being promoted is disastrous for Puerto Rico investors, who believed in their country and put their money where their hearts were.


*Holds a portfolio of Puerto Rico bonds