San Juan (FAIR) – With crushing debt threatening to annihilate its economy (CounterSpin, 7/31/15, 5/12/17), the island of Puerto Rico was already desperate. Then came Hurricane Maria, the September storm that tore through the US colony, leaving most of the island’s residents without power and many without water. The official death toll on the island from the Category 4 storm that packed winds of up to 155 miles per hour is at 43—and hospitals and funeral homes have said that the toll is significantly underreported.
President Donald Trump, in what appeared to be an uncharacteristic display of empathy, said on October 3 that the island’s $72 billion debt would have to be forgiven. Though the president’s statement was quickly walked back by administration officials, the idea of forgiving Puerto Rico’s debt is gaining political strength. In response to that push for debt forgiveness, corporate media are trying a new tactic: telling the American people that they own the debt — and that they will be on the hook.
By any definition, the fallout from Maria is a humanitarian crisis. But for New York Times financial journalist Andrew Ross Sorkin, that’s not the whole story: There are also the potential victims of the push for debt forgiveness, namely investors. Appearing on MSNBC‘s midday Saturday show Velshi and Ruhle (10/7/17), Sorkin told co-host Stephanie Ruhle that there were two humanitarian crises stemming from the storm:
So there’s two issues. There’s the humanitarian issue in Puerto Rico. And, to some degree, there’s a humanitarian issue on the other side of who owns those bonds, which is basically all of us.
“Basically all of us” own the debt. Thus, forgiving it would destroy American households’ finances.
In fact, hedge funds own around a quarter of the debt. The rest is held by “retail investors,” or individuals with the resources to purchase stocks and bonds themselves—those 500,000 American bondholders are hardly representative of “all of us.”
But the argument that “everyone” owns a piece of the debt is gaining steam in the mainstream news media. It’s corporate media’s attempt to spread the pain that the wealthy would feel from debt forgiveness (as unlikely as that really is) and shift the conversation away from real economic change.
“Who really has exposure to Puerto Rican bonds?” asked CNBC‘s Lorie Konish (10/4/17). “Chances are, you do.” CNN Money reporter Matt Egan (10/9/17) told readers that after the 25 percent or so of debt held by hedge funds, “the rest of the debt is owned by individuals and mutual funds that are held by mom-and-pop investors.” And Aaron Hankin of Investopedia(10/4/17) told readers that “a substantial portion of the government debt is held by ‘mom-and-pop’ small investors.”
All three reports base their assumptions on comments from financial reporter Cate Long, founder of the Puerto Rico Clearinghouse website. Long’s comments on how the debt was held by everyday Americans appeared in each article, as well as subsequent pieces at CNBC (10/4/17), CNN Money(10/4/17), MSN (10/4/17) and New York (10/4/17). No other source was cited in these reports making the case that Puerto Rico’s debt would affect everyday Americans—and yet news reports credulously repeated the talking point ad nauseam.
Corporate media typically portray financial interests that benefit a minority of Americans as representing the entire country (Extra!, 7–8/02). And they frequently reject the idea that wealthy investors should actually take the losses that are a normal consequence of risky investments; during the economic crisis and subsequent bank bailout in 2008–10, FAIR reported on this double standard on a number of occasions.
Yet even with the corporate media’s propensity for shoving the costs of the financial failures of the 1 percent onto the rest of America, calling the possibility of debt forgiveness for storm-ravaged Puerto Rico a “humanitarian issue” for investors is a new low.