domingo, 15 de noviembre de 2009

Puerto Rico Bonds Beat US States as Fortuno cuts

Buen articulo...lo que la prensa izquierdozzza de Puerto Rico no comenta......





Puerto Rico Bonds Beat U.S. States as Fortuno Cuts (Update1)


By Jerry Hart

Nov. 13 (Bloomberg) -- Governor Luis Fortuno’s declaration of a fiscal emergency hasn’t deterred investors from buying Puerto Rico’s bonds, whose 20 percent return this year beat debt indexes in every U.S. state tracked by Standard & Poor’s.

Keeping investors interested in the Commonwealth’s $47 billion of debt may depend on the Republican governor’s plan to cut a $3.2 billion budget deficit, revive an economy that shrank 5.5 percent in the last fiscal year and rescue a credit rating one level from high-risk, high-yield junk. Since taking office in January, Fortuno eliminated 22,500 government jobs, riling a constituency that makes up 30 percent of the labor force.

“I’m not here to win a popularity contest,” Fortuno, 49, said by telephone from San Juan during a national strike on Oct. 15, when protesters and police clashed outside the Fortress, his home in the old section of the walled capital founded by Spain in 1521. “I’m here to deliver results.”

Bonds of Puerto Rico, which was ceded to the U.S. in 1898 after the Spanish-American War, are exempt from taxes in any state, unlike most municipal debt. The securities have benefited from record cash flows into municipal-bond funds, masking an economy that contracted in the 12 months ended June 30 at twice the 2.4 percent forecast for the country as a whole in 2009, the median estimate of analysts in a Bloomberg survey.

‘Too Few Bonds’

“I’m happy to have them because there’s a lot of cash chasing too few bonds,” said Michael Walls, who manages the $533 million Municipal High Income Fund at Waddell & Reed Financial Inc. in Overland Park, Kansas. “The more dicey a credit is, the more it’s rallied.” His fund owns Puerto Rico securities backed by sales taxes.

The difference in yield between a 6.5 percent Puerto Rico sales-tax bond sold in June, rated A+ by S&P, and a Municipal Market Advisors’ index of 30-year AAA rated municipal securities narrowed to 45 basis points on Nov. 9 from 100 on Aug. 28, as investors drove prices of the Commonwealth’s securities up and interest rates down more than higher-rated debt. A basis point is one one-hundredth of a percentage point.

The Commonwealth’s debt, including the sales-tax-backed and general-obligation securities rated BBB- by S&P, one step from non-investment grade, returned 20.1 percent this year through yesterday, according to the S&P Puerto Rico Municipal Bond Index. That’s a bigger gain than any of S&P’s 27 state indexes and compares with the 13.3 percent return for the S&P/Investortools Municipal Bond Main Index of all municipal debt, which rose 13.3 percent. S&P’s high-yield muni index increased 33.2 percent.

$55 Billion

A 5.75 percent Puerto Rico general-obligation bond due in 2038 that was priced earlier this month at a discount of 96.59 to yield 6 percent rose as high as 101.35 in the when-issued market to yield 5.57 percent, according to data compiled by Bloomberg. They were offered at 5.9 percent yesterday.

Debt of the Caribbean island, whose population of 4 million is about equal to Kentucky’s, is riding a rally in which investors poured a record $55 billion into municipal-bond mutual funds this year, according to the Investment Company Institute in Washington, D.C.

Fortuno’s so-called fiscal stabilization plan will have to show results soon to sustain the gains investors have recorded, said Matt Fabian, managing director at Municipal Market Advisors, a researcher in Concord, Massachusetts.

“You have a major implementation risk involving how well the plan will do,” Fabian said in an interview. “It’s not a credit that’s out of the woods yet.”

Fortuno, who earned a law degree from the University of Virginia, served as Puerto Rico’s non-voting delegate to the U.S. House of Representatives in Washington before winning the governorship a year ago with 53 percent of the votes.

Shrinking Payroll

He declared a fiscal emergency in March with a plan to curtail public spending, which has boosted borrowing to 83 percent of economic output, according to S&P. That is four times more than Massachusetts, which has more debt as a portion of GDP than any state, with 20 percent in 2007, according to the Tax Foundation, a Washington, D.C.-based research organization.

Fortuno wants $2 billion of spending cuts, mostly through reductions in the Commonwealth’s payroll. He proposed deploying $6 billion of federal stimulus funds and $500 million from his government to employ fired workers on infrastructure projects while trying to lure private companies to maintain employment.

“We’re throwing almost $7 billion out there in the next few months, which is major for our size,” Fortuno said in an interview when he announced the effort.

Stabilization Fund

The governor’s fiscal plan will raise Puerto Rico’s jobless rate by 2 percentage points, said the Government Development Bank, the commonwealth’s borrowing agent. Unemployment was 16.2 percent in September, the highest since May 2006 and more than any state.

To support fired workers’ transition into private employment, Fortuno’s plan includes a $2.5 billion stabilization fund financed by sales-tax-backed bonds sold by the development bank. Carlos Garcia, president of the San Juan-based institution, said $1.5 billion for the fund was raised from a $5.3 billion series of bonds announced in June.

In the interview last month, Fortuno invoked memories of 2006, when government offices shut for more than two weeks until lawmakers negotiated a bailout from the development bank to plug a revenue shortfall.

“We don’t have a choice,” Fortuno said. “I’m not going to allow this place to close down like it did once.”

June Target

While Fortuno demands spending reductions, tax revenue is falling in the self-governing Commonwealth, whose residents pay only local income and sales taxes and no federal income levies. Collections dropped 5 percent in August from a year earlier, the eighth decline in 12 months, according to the development bank.

With unemployment rising and revenue declining, Fortuno suspended government job cuts short of his original target of 30,000, he said in an interview on Oct. 22 at a conference in Fajardo, 30 miles (49 kilometers) east of San Juan. Only $1.2 billion of the governor’s proposed spending reductions have been implemented, with the balance planned by the time the current fiscal year ends next June, the development bank said on Oct. 2.

Such delays aren’t surprising, said Horacio Aldrete- Sanchez, a Dallas-based S&P analyst.

“Balanced budgets won’t be achieved right away,” he said in an interview. “We always assumed it will take several years to achieve fiscal balance.”

Pharmaceutical Jobs

The island’s transformation from agriculture to one where manufacturing provided 46 percent of income in 2002 has stalled because of the global recession and the end of U.S. tax incentives that created 100,000 pharmaceutical jobs in the 1990s, said Miguel Soto-Class, executive director of the Center for the New Economy in San Juan, a private researcher.

More local enterprise is needed, especially tourism, which comprises 7 percent of the economy, he said.

“We consume things we don’t make with money that’s not ours, and you can’t grow an economy that way,” Soto-Class said. “We need a top-to-bottom reinvention of the taxing system to widen the tax base and lower rates.”

The development bank’s Economic Activity Index, which measures employment, cement sales, electricity and gas consumption, rose 0.8 percent in September from the previous month, the biggest gain since October 2006, the institution said Nov. 2. Still, investors are looking more toward reductions in the budget gap, spending and debt.

“The governor has said some strong things about how they’re going to reduce the deficit,” said Doug Nelson, a credit analyst at Waddell & Reed. “I’d like to believe him, but when you look at the history of Puerto Rico, they’ve had a lot of financial difficulties over the years.”

To contact the reporter on this story: Jerry Hart in Miami at jhart@bloomberg.net.

Puerto Rico-Island paradise Tax shelter

Great article...




By Richard Rahn

Have you noticed that many politicians who have trouble dealing with reality also seem to prefer fantasyland when dealing with budgets?

Those on the left never stop claiming that problems will be solved if only tax rates are increased. Why then does California, with its 10.6 percent state income tax rate, have a huge budget deficit and a 12.2 percent unemployment rate, while Texas, which does not have a state income tax, enjoys a budget surplus and a below average unemployment rate of 8.2 percent?

Why then does nearly bankrupt Rhode Island with the eighth-highest overall state tax burden in the United States, including a 7.75 percent income tax rate, have a 13 percent unemployment rate, while South Dakota with the fourth-lowest state tax burden and no state income tax, have virtually full employment with only 4.8 percent unemployment?

New York politicians have been living in political fantasyland for many years. Upper-income people living in New York City have faced the highest state and local income tax rates in the country (over 12 percent). Recent studies show high-income earners are in mass flight from New York to friendlier tax environments. The rational thing for New York politicians to do would be to cut tax rates to make New York more competitive; but no, they increased taxes on the top earners (many of whom continue to pack their bags).

It is not only politicians who live in fantasyland, but others as well, such as some labor leaders. The new (in office since January) Republican governor of Puerto Rico, Luis G. Fortuno, inherited a budget deficit of $3.2 billion, which is larger than any state budget in the United States on a per capita basis.

For many years, Puerto Rico has suffered from bloated government with five times as many government workers per capita than California. Seventy percent of the budget goes for government salaries and benefits.

Mr. Fortuno has had little choice but to take drastic action to keep the government from going bankrupt and losing its credit rating. He has already laid off 4,000 government employees, and he plans to lay off another 17,000 this week.

As would be expected, the Service Employees International Union (SEIU), who brought on a good part of the crisis through its excessive employment and wage demands, is now trying to prevent the governor from doing what is needed.

The SEIU has yet to learn that a parasite that kills its host soon finds it has no place to live (work) - just ask the auto union. Unlike the governor, the SEIU and the others continue to live in fantasyland, ignoring the fact that the cookie jar is empty.

Vice President Joseph R. Biden Jr., who has a long history of confusing facts with fiction, this past week added to the administration's claim that "nearly 650,000" jobs have been created or saved by the stimulus package. He said the recovery plan "is operating as advertised" and is on target to reach the president's goal.

In reply, the highly respected economist, Alan Meltzer, who has a long history of being able to distinguish between facts and fiction, said: "The administration can make up any number it pleases. The number has no meaning. The Council of Economic Advisers gets a number for jobs saved using the same model that Dr. Christina Romer and Jared Bernstein used when they forecast that the $787 billion stimulus program would keep the worst unemployment rate in this recession at about 8 percent. But as we all know, since that bill became law, our economy has shed some 3 million jobs and the unemployment rate is nearing double digits."

Ironically, the Obama administration and the politicians who run New York, California, etc., may ultimately help Mr. Fortuno by driving many of their highest-earning and most productive citizens to Puerto Rico.

Mr. Fortuno has made it clear that he believes the key to solving Puerto Rico's economic problems is to reduce the size of the government and take its foot off the windpipe of the private sector. He told me at a breakfast meeting last week that he wants to reform the tax system and reduce rates for everyone.

Any American citizen (which includes all native-born Puerto Ricans) who resides in Puerto Rico pays income taxes to the Puerto Rican, not to the U.S., government. The maximum income tax rate in Puerto Rico is now 33 percent, just a couple of points lower than the U.S. federal rate.

But if Mr. Obama succeeds in raising the maximum federal income tax rate up to the 50 percent range (by letting the Bush tax cuts expire and increasing "surtaxes" to fund his health care and energy schemes), and if the high-tax states continue to raise their rates so the total burden on upper-income people reaches 60 percent or more, Puerto Rican residency is going to become increasingly attractive.

At the moment, most who flee the high-tax states go to states without an income tax like Texas, Florida, and so on, but they still have to pay the federal income tax. Thus if Mr. Fortuno is able to reduce the maximum marginal tax rates in Puerto Rico to the mid-20s, many job-creating entrepreneurs are likely to make a beeline toward what will increasingly be an island paradise, where tax rates will be half of what they are on the mainland.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

Indecencia

Buen articulo....

Por Zoe Valdes

Indecencia. Por Zoe Valdes
A los cubanos no está sucediendo lo que a los rusos en la época en que escapaban del comunismo: afuera nadie les creía. Pero a nosotros nos está pasando peor, porque nosotros nos hemos quedado desfasados en todo, fuera de caja o de molde, fuera de tiempo. Pocos nos entienden; la revolución castrista fracasó como proyecto, pero ha obtenido un sólo triunfo: el hombre nuevo. El hombre nuevo es ese que tan bien retrata el cineasta León Ichaso en su reciente película Paradiso, Son los que vienen de Cuba con el cuchillo entre los dientes, a los que les da lo mismo jinetear que matar, y viven esencialmente del engaño, de la mentira, del trueque y del truco. Son el hombre y la mujer orquesta, hoy son actores o actrices, mañana serán cineastas, pasado devendrán escritores, o pintores; la cosa es vivir del cuento, y hasta dinero le sacan. No leen, ni les interesa leer de manera profunda, leen lo estricto para tener un barniz, y con ese barniz salir al ruedo a encajarle los cuernos a quien se les ponga por delante. Llegan a tu casa, en medio de un domingo, o de cualquier noche, te lloriquean un poco, piden dinero prestado, o que les consigas un trabajo, si es una beca, mejor, te sacan ideas, proyectos, te ensalzan con falsedades, te comen a mentiras, lo mismo harán con otros en cuanto te dejen a tí, al rato, en el café más cercano los verás lloriqueando frente a un amante que hicieron viajar desde Barcelona, o desde Japón, o desde la Conchinchina. Dan la mordida o el zarpazo y se largan con su rumba a arañar al próximo que ya tienen en mirilla.

En cuanto poseen un pasaporte (cosa fácil para ellos, lo tramitan desde la cama y sin pagar impuestos), y un trabajito o beca bien remunerados, regresan a Cuba a especular; se compran una casa o se la tumban a alguien. Dicen ellos mismos de sí mismos que se han convertido en personas de culto, qué risa, por dios, qué poca vergüenza y todavía menos modestia, qué estupidez tan inmensa. Y al instante, y lo que resulta más oneroso, se convierten en agentes del régimen. A trabajar para que se hagan concierticos por la paz en la plaza de la revolución, y a contarles a los “ingenuos” que en Cuba todo ha cambiado, que ya debemos pasar página, olvidar y perdonar, qué cínicos, como si ellos vivieran del olvido y del perdón. ¡Qué siniestros y sobre todo, qué indecentes en el peor sentido de la palabra! Yo viví en una época en que incluso la indecencia era tierna, era bajarse los blúmers debajo de una escalera, o hacer el amor en una azotea o apretar en el Malecón. No, ahora la indecencia lleva carnet y es militante castrista, el carnet tiene forma de libro o de cuadro, en la mayoría de las ocasiones; y en sus páginas, como en las telas, se cuentan las mismas ponzoñas que contaron en el pasado sus protagonistas reales; los robots sociolistas empiezan entonces a desenterrar mártires. ¡Pobre gentuza sin vida propia que se aferra a la de los demás para poder existir!

Es probable que Juanes, al inicio, haya sido víctima de esta gente, como Benicio del Toro; aunque al segundo lo conocí y enseguida me olió a ñángara envilecido. Juanes ayer hizo alarde de ubicuidad: Mientras afirmaba en Telesur que lo habían amenazado de muerte y citaba de manera errónea e inculta la frase de Voltaire con la que lo apoyaron en Twitter en lugar de amenazarlo como afirmó, además daba una entrevista a El Nuevo Herald en la que decía que sentía haber dañado a la comunidad cubana de Miami (no ha sido sólo a la de Miami a la que ha ofendido, ha sido a la del mundo), y también se presentaba en un concierto en Nueva York “arropado”, acuñó la prensa, de cantantes que lo apoyaron, defendieron, y resguardaron ¿de quiénes? De nosotros ¡faltaría más! De los malos de la película, de”los verdugos”, del exilio histérico, etc. ¡Qué indecencia! Así que él va a cantarle a una dictadura que ha asesinado vilmente a cientos de miles de inocentes, ha metido en la cárcel a otros tantos de miles, ha expulsado al exilio al veinte por ciento de la población, usa la pena de muerte cada vez que le sale de las verijas, para colmo, el concierto se lo organizan y amparan dos desalmados que firmaron una carta de apoyo a la pena de muerte contra tres jóvenes negros que sólo intentaban irse de ese país de basura, y ahora resulta que Juanes es la víctima del exilio y nosotros los verdugos. ¡Qué descaro tan insoportable!

Entonces le vi las cejas a Juanes, tiene las mismas cejas de Zapatero y que las de Obama; las mismas que las de Castro. Entonces me di cuenta que Juanes es otro de los que ha salido con el cuchillo entre los dientes, pagado por Havana Club, el ron castrista robado a Bacardí; Juanes es otro hombre nuevo, de los fabricados fuera, alfabetizado por las necias canciones de Silvio, los discursos del Ché y de Fidel que tanto alabó en un periódico mexicano. Juanes es de la misma estirpe de esa mujer nueva y de ese hombre nuevo cubanos, que salen de Cuba, no por problemas políticos, no, ¡qué va!, ellos salen a jinetearse al mundo bajo control de Gabo y de la Balcells. Dijo Juanes que él no es comunista, no, él es un oportunista, o sea, está en el camino correcto para devenir comunista, y comunista de los rastreros, de los representantes de la crueldad, de los voceros conscientes que están siendo mensajeros del horror. A eso me refiero, a la inmoralidad de pensamiento, a la acción cochina.

Pero quiero adelantarles algo, amigos míos, en esta guerra hemos perdido los que amamos la libertad. Porque en esta guerra -como bien dice Juan Abreu-, ellos hablan de paz, se llenan las bocas para hablar de paz. Y con la careta de la paz van ensuciando la libertad y cagándose en nuestros muertos, con toda la pompa y el ruido ensordecedor de una música para imbéciles. No estamos tratando aquí con gente decente, estamos frente a delincuentes, a gente que lo único que les vale es la pasta, los millones, frente a capitalistas millonarios disfrazados de mendigos, como Manu Chao y compañía, con pañuelito palestino al cuello, y tatuajes del Ché hasta en los párpados, estamos tratando con extremistas de izquierda, que son idénticos a los extremistas de derecha. Y ellos saben que lo que vende es eso, por eso se aferran al miserabilismo de izquierda, a una paz de pacotilla, a una paz manchada de sangre, a una paz en la que ni ellos mismos creen, porque nunca han vivido el terror, jamás lo sintieron en carne propia.

Estamos ante la indecencia más asquerosa que jamás se haya visto, la de los sucios de espíritu y de corazón.