Through the Cracks

By   /   December 5, 2015  /   9 Comments

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While the Greek debt crisis was dominating the world news in late June and early July, another equally significant crisis began to unfold, and is now at its second major stage

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While the Greek debt crisis was dominating the world news in late June and early July, another equally significant crisis began to unfold, and is now at its second major stage. Puerto Rico’s government owes US$72 billion dollars “next Tuesday“; money that it cannot pay. (See The Guardian Puerto Rico’s governor tells US Senate the island cannot repay debts, 1 Dec 2015.) Puerto Rico, with 3.5 million people, is of comparable population size to New Zealand, and one-third of the size of Greece. Yet Puerto Rican have fallen through the cracks of world attention and sympathy.

Recent articles in The Economist say things like Quasi-sovereign debt: Puerto Rico doesn’t have the moneyHurricane warningNo way outThe Puerto Rico problem mainland politicians find the territory too hard a place to talk aboutA Caribbean fuseNeither a state nor independentAnother fine debt crisis; Startling parallels between Greece and an American outpost in the Caribbean.

In November the BBC Windows on the World documentary Puerto Rico: The Have Nots and the Have Yachts played on Radio New Zealand (or ‘rnz’ as we are now supposed to call it). Puerto Rico is neither a sovereign nation nor an equal part of a larger sovereign entity. Its people have become denizens (the ‘have nots’) in their own land, much as New Zealanders across the ditch are denizens who have no effective civic rights. Puerto Rico is being bought up lock stock and barrel by rich Americans, the ‘have yachts’.

The specific problem is that the world is organised into a nation state system (the Wilsonian system) that is too rigid, though which has a fuzziness that we find difficult to deal with because we assume too easily that everyone is a citizen of one or other mutually exclusive nation state. In the case of the United States, the main overseas territories in which the people are quasi-Americans rather than actual Americans are Puerto Rico, American Samoa, Guam, Northern Marianas, and the US Virgin Islands.

The European Union itself is a form of fuzziness, with variations of fuzziness linked to the Eurozone and the Schengen agreement for open borders. The United Kingdom is extremely fuzzy. Indeed, some of us may have just discovered that parts of Cyprus – Akrotiri and Dhekelia – are a UK overseas territory; an aircraft carrier in the Middle East.

New Zealand retains much fuzziness. We have our own overseas territories: Cook Islands, Tokelau and Niue. (Together these, with the lands Australia covets as its 7th and 8th states, formally formed the Realm of New Zealand in 1983.) New Zealand embraced its own nationhood in many small steps: 1769, 1835, 1840 (2 steps, the second being independence from New South Wales), 1846, 1852, 1857, 1865, 1867, 1876, 1894, 1900, 1907, 1926, 1931, 1934, 1947, 1950, 1972, 1982, 1983, 1986, 1990, 1996, 2001, 2003. 2016 could be another step.

The global solution is not to further entrench the Wilsonian system by removing the fuzziness. The Wilsonian system has already facilitated a form of very lazy thinking on the part of westerners who like to talk about places like Iraq and Syria as if they are nice neat and ordered sovereign entities: country IQ and country SY in the same list as countries US, UK, NZ and SA. (Of course state-Americans, while they impose this structure on the rest of the world, reject it for themselves, on the grounds of entrenched American “exceptionalism”. And why Puerto Ricans – as territory-Americans – do not have the same status as Hawaiians remains a mystery.)

The solution is to embrace the fuzzinesses of identity and ethnicity and nationality. New Zealand residents should be treated as equals in Australia. And Catholics – with their caliph in Rome – should be treated the same as people of other faiths. (Anti-Catholic discrimination has been widespread in the English-speaking world.) Sectarian differences will always create a fuzz-factor that could be seen as a positive rather than as a negative.

Puerto Ricans should be treated as equals to other Americans, in Puerto Rico and elsewhere. They should have the same rights to default on debt as anyone else, and their government likewise should be treated like any other defaulting government (with general reform needed with respect to sovereign debt default).

We introduced limited liability for businesses in the nineteenth century. Most westerners are able to default by becoming bankrupt; rotting in debtors’ prisons is now too Dickensian for most of us to contemplate. Indeed, without these institutions that accept debt-default as a regular and necessary part of life, the economic development of the twentieth century could never have taken place.

Identity is a great thing. We all have multiple identities, including our financial statuses (debtor/creditor, tenant/mortgagor/freeholder) and our various political and cultural affiliations. But under God – whatever or whoever It may be – we are shareholders in our planet, whether we are from Valparaiso, Pago Pago, San Francisco, San Juan, Saipan, Guam, Gundagai, Tubuai, Tangiwai, Chennai, Chengdu, Cebu, Cairo, Christchurch, Wexford, Westport, West Bromwich, Cape Town, Townsville or Palmerston North. We have private identities and public equity. With public equity properly ensconced, we cannot fall through the cracks.

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9 Comments

  1. Jack Ramaka says:

    Interesting to know where National are taking us with our National Debt, $105 Billion, Roger Douglas told us we were virtually bankrupt in 1984 until he came to the rescue with the Asset Sales.

    What is our debt and net equity position compared to 1984, I believe we are all being lead up the garden path by these politicans?

    I believe we have a greater debt and less equity (assets) than we did in 1984 hence we are now in a worse state. However the media tell us Bill English is a safe pair of hands? Can somebody clarify this?

    • Sam Sam says:

      Yup. Short term gains for long term loses.

      What isn’t said is that our loses are infinit. That means debt keeps rising, and no one has a solution for rising debt

    • wild katipo says:

      Fred Dagg once told us ” If we stand in the queue with our hats out, – we can borrow a few billion more ”…

      Interesting that all these cases of credit loans dangled before these country’s ( yes – even us – especially us) always seem to have come with strings attached at a particular given date that the loans are recalled…

      And thusly we go into overnight debt and panic and declare we cant pay it…

      Such a nice, contrived way to bring a country to its knees and then control it….overiding its govt in the process and dictating how its population shall live henceforth… especially when the groups involved in drawing up those contracts knew damn well there would come a critical mass point when a country becomes ripe for the picking…and control.

      What say you , … Mr Bergerbuilder who builds a bigger and better burger for the Bilderbergers to eat.

    • Winnie says:

      I’m joining a few dots with regard to National, National Identity and National debt. NZ National debt: http://www.nationaldebtclocks.org/debtclock/newzealand

      Dump the old flag – hide the debt under someone else’s bigger debt.

      With the old Flag we could have appealed to the Brits (the union jack bit in the corner). They would hide our $105 billion debt somewhere in the British £1.56 trillion debt. It’s the least the Brits can do for us for giving the monarchy some holidays and for turning their backs on us to join the EEC. Or they could ask the EEC to re-finance our debt.
      http://www.nationaldebtclocks.org/debtclock/unitedkingdom

      With the old Flag we could have appealed to the Aussies (the union jack bit in the corner and the starry bits on the blue). With the Aussies we could have hidden our debt in the Aussie outback. Or just merged it with their debt. But I think they cottoned on that’s what we were going to do, so started sending prisoners back here to disrupt closer economic relations.

      On an aside, I remember a few months ago we almost got Dollar parity with the Aussies all the bankers wahooed. That would have got us ECER (Extremely Closer Economic Relations) to help hide the debt. I knew there was something sneaky going on if bankers were wahooing. Bankers.

      New flag – hide the debt under Global warming.
      We are going to have to pretend we are spending $105 billion somewhere else. I know, let’s spend it the Pacific on global warming island relief, or offload some of our debt to Fiji, or somewhere else that’s wet and hot: http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11553794

      Don’t worry, the TPPA means we can hide our $105 billion somewhere big.

      Now we’ve got TPPA, we can put a few corporate logos all over our flag and the US will add our $105 billion onto its $18 trillion. Sorted
      http://www.nationaldebtclocks.org/debtclock/unitedstates

      It’s a pity that SORTED, https://www.sorted.org.nz/ , doesn’t have worldwide branch. It could easily get our $105 billion debt sorted PLUS all the other countries in the world.

      Get China to take over the debt – it’s pretty big.

      We cannot annoy the Chinese by having a Chinese House Buyers register.

      The solution:.
      Declare NZ bankrupt. Close everything up and walk out. Put a sign on the door – gone to cohabit a country beginning with “I” (Iceland, Ireland, Italy). Get a new flag. SORTED

    • saveNZ says:

      @Jack R

      +1 – what is even worse is that the media and in particular the business media of NZ can’t even be bothered to point this out, perpetuating the myth we are a ‘rock star’ economy.

  2. Korakys says:

    *sigh* can’t you just call it the Westphalian system, like everyone else?

  3. Korakys says:

    Argentina proves that even being a completely sovereign state offers no freedom to default. Only the most powerful states will be allowed to do so.

  4. Mike in Auckland says:

    Keep a close watch also on Brazil, South Africa, Russia and China, last not least the petroleum dollar addicts Nigeria, Iran, Venezuela and so forth, last down the line perhaps even Saudi, we are heading into a downward spiral, I reckon, seriously.

  5. Mike in Auckland says:

    Strange, I left a comment here last night (10.05 pm), and also under the topic ‘The Battle of Britain’ but none have shown up. More recent ones by others are showing, so are there issues with comments being lost again?



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