Dean Baker
Truthout, November 6, 2017

Jacob Wilson
L'Antiplomatico, 3 novembre, 2017

Mark WeisbrotGlobedia, 30 de octubre, 2017

November 3, 2017

November 3, 2017

November 3, 2017 (Jobs Byte)

Dean Baker
HuffPost, November 2, 2017

It is common for economists to assert that the trade deficit is equal to the gap between national savings and national investment. If the United States invests more than it saves (combining private savings and government savings) then it is running a trade deficit. This is true by definition.

Intro Econ fans may remember that we have the basic accounting identity saying that output is equal to income:

C+I+G+(X-M)=Y

...where C is consumption,

...I is investment,

...G is government spending,

...X-M is net exports (exports minus imports),

and Y is income.

We also can say that Y=S+C+T,

...where S is savings,

...C is consumption,

...and T is taxes.

The basic story is that the government taxes away some of our income and the rest is either saved or consumed (saved means it is not consumed).

Last month, a joint investigation by In These Times and the Puerto Rico-based Centro de Periodismo Investigativo revealed the top 10 holders of Puerto Rico’s $74.8 billion debt. The authors write:

The popular narrative of Puerto Rico’s debt holders is that they are “small” individual bondholders—rookie investors who trusted their savings to financial firms. But our investigation reveals that some of the most aggressive players demanding debt repayment in Puerto Rico’s bankruptcy court are so-called “vulture firms.” These hedge funds specialize in high-risk “troubled assets” near default or bankruptcy and cater to millionaire and billionaire investors.

While these bondholders are tied up in court with Puerto Rico and the congressionally mandated Oversight Board, the situation on the ground remains grim after the devastation caused by Hurricanes Irma and Maria. Storm-related damages are estimated to be as high as $95 billion.

If Puerto Rico was unable to pay its debt before the storms, it’s virtually impossible now. But that hasn’t stopped at least one vulture, GoldenTree Asset Management, from doubling down on its Puerto Rico bet.

Number five on the In These Times/Centro de Periodismo Investigativo list, GoldenTree reportedly held $587,253,141 worth of Puerto Rican COFINA bonds (bonds backed by income from Puerto Rico’s sales tax). That figure was based on a court filing from mid-August. On October 26, however, bondholders were required to again disclose their financial interests. That filing showed GoldenTree holding assets valued at $852,578,549, meaning that in the last two months, GoldenTree has acquired an additional $250 million in Puerto Rican bonds.

This is classic vulture behavior ? and exactly why many are now arguing for urgent and significant debt relief for the struggling island.

It’s impossible to know exactly when or at what cost GoldenTree acquired those additional bonds ? a spokesperson for GoldenTree declined to answer questions on the timing or cost of the purchases. But even before the hurricanes, COFINA bonds were trading at significantly less than face value. After Hurricane Maria, with Puerto Rico’s inability to pay becoming more obvious, prices have plummeted even further. Given that, and based on where some COFINA bonds are currently trading, it appears unlikely GoldenTree would have paid more than 20 cents on the dollar. At that price, if GoldenTree were repaid in full just on these recent acquisitions it would stand to make a tidy 400 percent profit.

November 2017, David Rosnick and Dean Baker

Two weeks ago, the Food and Agriculture Organization of the United Nations (FAO) released a report on food insecurity and nutrition in Latin America and the Caribbean. The report highlighted a regional increase in food insecurity, a first since the agency started collecting annual data for the Millennium Development Goals in 2000. The authors noted that the food crisis in Venezuela was central to this increase. While the percentage of the population in Venezuela experiencing undernourishment was lower than several other countries in the region ? such as Bolivia, Guatemala, Haiti, and Honduras ? in the last three years, Venezuela contributed an estimated 1.3 million newly food-insecure people to Latin America’s total.

The FAO study confirms that the Bolivarian Republic is facing a growing hunger crisis that requires action. For the past year and a half, the media have decried the Venezuelan government for its management of the crisis, but the figures they have cited do not match the FAO’s. Over the past 18 months, it has become accepted fact that the crisis is even worse than the FAO describes: the New York Times writes that “93 percent of the [Venezuelan] population cannot afford food,” and CNN reports Venezuelans “in the past year dropp[ed] an average of 19 pounds.” (In addition, a Jacobin article states: “Almost 90 percent of the population cannot buy enough food,” while The Independent laments that “75 per cent of the country’s population has lost an average of 19 pounds.”) This is because media coverage on hunger in Venezuela has relied primarily on anecdotal evidence and an inconclusive report authored in part by a member of the political coalition trying to remove Venezuelan President Nicolás Maduro from office.

US newspapers and journals often attribute their Venezuelan hunger figures to “a recent survey … by the country’s leading universities.” The survey in question was published on February 27, 2016 by Simón Bolívar University, the Central University of Venezuela, and the Bengoa Foundation. The report, which focuses on Venezuelan nutrition, is part of an annual review covering the state of living conditions in the country. Maritza Landaeta-Jiménez, who as recently as 2013 was a member of the Venezuelan opposition’s Nutrition Commission, headed the 2016 research. The document, based on a survey of 6,413 Venezuelans, reported that 93 percent of Venezuelans felt that they did not have enough money to purchase food, and that 72.7 percent of Venezuelans had lost an average of 8.7 kilograms (19 pounds) in the past year. However, the same survey revealed that 67.5 percent of Venezuelans were eating three meals a day, and only 25 percent of the country felt that their nutrition could be categorized as “deficient.”