AIG's Miller: Here’s Why Puerto Rico Isn’t Detroit

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Feb. 12 (Bloomberg) -- Steve Miller, chairman at AIG, explains the issues impacting the economy of Puerto Rico and what it can do to help itself on Bloomberg Television’s “Bloomberg Surveillance.”

Billion of debt.

Their tax revenues have gone downhill because they start collecting from a lot of the people who ordinarily would owe taxes.

You cannot go too far down that road or you will further depress the economy.

You have terrible unemployment in puerto rico.

It is 15.5%. you think it is higher than that.

It is really higher than that because fewer than half of the adult population is registered in the labor pool.

The unemployment is just awful there.

One other biggest action between puerto rico and, say, detroit -- at least in detroit you have the option of a bankruptcy to get a court supervised process.

Puerto rico is not a state, not a municipality.

It is a territory and the chapter nine process does not even apply.

Does the conversation start not in san juan, but washington?

I think that's right.

You have one good advantage in puerto rico, a new governor general who came in just a year ago.

He is passionate, enthusiastic, young, trying to get the right answers.

He is trying to reform the tax regime so that you can get better revenues coming in and some confidence that you have a plan to go forward.

A lot of people complain that the taxes are too high and the professional class cannot make a living there.

The brain drain from puerto rico is staggering.

What does the new government need to do to keep people in puerto rico?

He needs to articulate a vision for how we get out of this mess and gets up and people can believe in.

The tax revenue side, it is not raising the rates of taxes.

It is more equitably spreading the burden, so fewer people are skipping out on paying taxes.

If they can't go through the bankruptcy process, you can't do a negotiation through all the bondholders at once.

How do you reach all of these thousands of people?

Why now they are trying to raise another billion dollars just to keep paying the interest on the old that.

-- the old debt.

It'll be expensive for them because they had been downgraded to junk status.

If he can't get this turned around right away, it may have to go for restructuring the more the bondholders don't get the interest payments and everybody comes to the table and work it out.

It won't have for supervision like you would have in a chapter nine case.

But you still have the economic necessity to do something about it.

Is effectively like general motors, where steve wagner said -- steve ratner said i'm the cars are and this is how it is going to be?

There we had a chapter 11 case to make it all legal in the end, but elected president of the united states driving that.

Puerto rico, like it or not, is a territory of the united states and it is our problem collectively and we have to deal with it on a national level.

Would you own san juan double or triple tax-free bonds?

No, sir.

That about sums it up for porto rico.

Mike mckee and i have seen this

This text has been automatically generated. It may not be 100% accurate.

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