History is a vast early warning system.Those who do not read it will commit its mistakes!Norman Cousins
Definition of systemic risk
Systemic risk is the risk of collapse of an entire system financial or political entire as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. It can be defined as “financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries”. It refers to the risks imposed by interlinkages and inter-dependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire social or political system.
When the stock market crashed in 1929 the Nation was warned but nobody was listening! In happened gain in 2008 costing U.SA taxpayer ore than a trillion dollars! Again multiple warning were made and again no body was listening. Eli Wiesel eloquently once said, “We must take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented.” We are running out of time and action is of the essence and silence is not an option! After all it is the human race as a whole that is at stake! 3.3 million Amerian citizens in the archipelago of Puerto Rico are going through the systemic Risk processas you read this commentary leading toward s a total s political and catastrophic implosion and desintegrationof its social structure. The warning sigs have been there for years but as the Washington Post newspaper promotion says”if you don’t get it you don’t get it!” see: http://www.recoveringjournalist.typepad.com/recovering_journalist/2007/03/if_you_dont_get.html
Let see the warning sign and red flags ignored by Washington and by Puerto Rican government leaders.
*from 2001 to 2018 More than 600,000 Puerto Rican moved to Florida, North Carolina, Goergia and Virginia fatally affecting Puerto Rico’s ability to resurrect socially ane economicaaly and causing the loss of $11.5 billions less circulating in the anemic.Economy . This crisis willl be greater with the forecast of the U.S Census bureau that 1 million American citizens from Puerto Rico will be moving to the Union by 2050! leavian an additional 333,000 housing units empty!
* As a resuts of the massive population exodus there are according to the U. S Census more than 330-thousands housing units empty, foreclosed and abandoned! The U.S> Census is estimating an exodus of 300,000 of the territory’s population. This causes a deflationary result in the real estate market which is currently decomposing rapidly.
* Puerto Rico’s power grid was destroyed by two category five hurricanes Irma & Maria and after spending more than a billion dollars to be rebuild. It was rebuilt by preparing the grid-designed in patches like a huge quilt and does not positions Puerto Rico to effectively compete in the regional or global economy.It is so fragile that it has collapsed twice totally!the decision by the Trump administration of holding is not the answer. This will fuel population exodus further!
* The water infrastructure is fatally flawed losing more than 50 Percent of its treated water and costin USA and territorial taxpayers more than $600 millions dollars a year!
* The road and bridges are also obsolete and The White House decision to freeze $18.5 billions approved by Congress for the reconsrtruction of Puerto Rico besides being blatantly discriminatory is contrary to the law! and will continue to fuel massive population exodus to the USA!
* a decaying and non existent banking system foreclosing on more than 90,000 housing units, in 2000 Puerto Rico had 16 banks. Today 6 and they are not lending and are currntly under investigation by Federal regulators and laww enforcements for money laundering o billions of dollars a year!
* The Univerity of Puerto RIco’s campuses infrastructure is also deteriorated with abandoned buildingdue to administraive ineptitude, waste and corruption
* Puerto Rico health system is bankrupt due to the enormous cost of the universal health plan implanted by the first Rossello adsministration in 1993. It is costing USA and Teritorial tax payers more than $ 2.6 billion dollars a year.
* The Public school systems with a student population of more than 620,000 students in 1999 and now with less than 275,000 ihas virtually colapse!
* The gigantic govenrmental bureacracyis effectively paralyzing the development of new projects and attracting new investments.
* Manufacturing is literally frozen by the absence of a reliable infrastructure!
* Tourism has been affected by the systemic effect of a collapsing economy and has been unable to surpass its closest competitors the Dominican Republic and Cub. Puerto RIco has around 15,00 hotel rooms since the 1990s. The Dominican Republic and Cub have more than 200,0000 hotel rooms!
* A dysfunctional republican government with a Senate and house of reprenentantives sabotaging the executive branch itiatives to reform the archipelago and resisting the incompetence of Washington’s appointed and created Federal Supervisory Fiscal Board., who has already spent more than $ 1.4 billion dollars in legal counsel and consultants. The board created by th US. Congress in 2016 has failed to establish a comprehensive and strategic economic plan to inject investments and economic activity to a decomposing economic eco system. The Puerto Rico Supervisory Fiscal Board economic prescription follows the same structure as the FMI Grecian plan that failed catastrophically with Austerity measures and government budgetary cuts!
* A failed law enforcement platform where impunity rules; only 8% of every 100 murders are solved and corruption is a way of governmental ‘modus operandi.’
*absence of a public policy to deal with the fourth Industrial Revolution: Artificial intelligence and robots usurping human jobs!
The solution: The Hawaiian Archipelago’s model
As long as these fundamental components continue to exist on the Islands massive population exodus will continue altering the political landscape in key battlegound tates
with a direct effect in the 2018 and 2020 National elections.Analyse the 2018 and 2020 results, specially the GOP!
1- Admitting Puerto Rico as a state of the Union ( Please read Hawaii : The big change at : https://franklindelanolopez.com/2017/02/07/hawaii-the-big-change/. Since joning the Unionj 1959 the Hwaaian Poppultion increased from 622,000 to 1,442,000 in 2016. By granting political equality to the 3.3 million American citizens suffering inequality, and segregation since 1898. A great part of the 5.3 million Puerto Ricans living on in the 50 states will begin top return to the Island. Investments and job creation will begin to emergee. Just look at the Hawaian experience: a) One of the highest per capital of the Union with $59,000 and more tha 78, 000 hotel room. All of this by granting political equality. There are no industrial tax incentives laws and special corporate welfare (or 936 industries) No exemption from the Federal minimum wage laws in Puerto Rico as the first Hispanic state will be a natural bridge fo tap into the 4690 billion latin american market . By doing so the USA would be neutralizing Chinas “open wallet” overture in the region! STATEHOOD= Equality IS THE ONLY SOlution to solve Puerto Rico’s Reconstruction and bringing back the majority of the 5.5 million living in the union!
If the Trump administration decides to procrastinate Puerto Rico will fall on an economic spiral into to a systemic risk abyss ! The balance of the 3. 3 million citizens or at least 92% of them eventually will move to the lower 48, as Gallup and newspaper polls have revealed it will happen. Washington must act swiftly and diligently Puerto Rico is a formidable e Bridge to Bring the $14 trillion a year Latin America into the USA Sphere of influence. Neutralizing China’s “Open Wallet” Policy In Latin America. See: http://money.cnn.com/2015/03/04/news/economy/china-latin-america-relations-united-states/index.html if Washington decides to ignore this Puerto Rico will be navigating as a ghostship in the Caribbean!
The news that the Trump administration is withholding reconstruction federal funds will have a fatal effects on the economy and stability of a fragile economic environment, as well as cutting a $5.5 billion health aid to the territory, thus creating a chilling effect on the nervous population in the territory, The Trump White House should consider creating a new FEDERAL TASK FORCE with senior administration executives with total powers to supervise and run Puerto Rico’s Government until statehood is achieve and adopt a Zero tolerance to corrupt politicians! It is always the right time to do the right thing!