Trump finally got around to tweeting about the humanitarian crisis in Puerto Rico. The problem, he tweeted, is not so much the hurricanes but the people of the island. They caused this mess by not upgrading their electrical system. Florida and Texas, Trump tweeted, did exactly that and so are doing great after the storms. Trump also raised the serious specter of PR's debt, which skyrocketed in recent years to over $70 billion (75 percent of its GDP). Trump's conclusion? PR is in "deep trouble."
But no matter what the island did before Irma and Maria, there was no way it could repay that debt, which is held by Wall Street bondholders. After the hurricanes, the debt is even more unreal. First, you have the problem of global warming, which will make future hurricanes even more destructive. Secondly, it's already estimated that returning basic services on the island will take many months and several billions. Those billions do not exist. And if they do, the bondholders want them.
The three Trump tweets that outraged many on social media actually mirror Wall Street's official position on Puerto Rico. They were given more words, but captured the same essence, in the Financial Times post "US territory should sacrifice its politicians, not its investors." These investors don't want the debt to be eclipsed by the disaster. But how did the island end up with a prone electrical system in the first place? Austerity. PR's government was servicing its debt at the expense of its infrastructure and social services. And where did this debt come from in the first place? In a way, PR is a lot like Greece. The woes of both began with the geopolitics of the Cold War.
In 1976, the US gave the island a tax break (section 936) that stimulated the island's economy and showed the Caribbean world that capitalism was far better than communism. Similarly, Greece received Cold War transfers (cash with no ties) directly from Germany to keep it in the orbit of Euro capitalism. After the Cold War, the US dropped Puerto Rico just as Germany dropped Greece. The abandoned countries had to turn to debt to keep things going. Greece hit a debt crisis in 2010, and Puerto Rico in 2015, when it defaulted "on a $58 million bond payment." Not long after, its sovereign bonds were downgrade to junk bonds.
The disaster of austerity is now compounded the disaster of the hurricanes. The island may never come out of this in one piece.