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Bondholders Stunned As Puerto Rico Finds $4.4 Billion In Outstanding Debt “Unconstitutional”

padilla

If the Government, at any level, sells bonds they do not have the authority to sell, are the citizens liable? No. Neither is the government itself, but rather, the agents of the government who authorized the sale of the bonds, including the politicians who authorized it, as they all acted outside their constitutional authority. – Shorty Dawkins, Associate Editor

This article comes from zerohedge.com

After Puerto Rico defaulted on its $422 million debt payment in May, governor Padilla begged congress to step in and help out, which happened shortly thereafter when a House committee cleared legislation that provided Puerto Rico with a way forward on restructuring its debt.

As it turns out, on the day the House announced that it planned on taking up the Puerto Rico bill next week, a 17 member audit commission found that two debt issues worth $4.4 billion of the $72 billion in debt outstanding were unconstitutional.

Said otherwise, the government may now just declare the bonds invalid. It’s a handy development for governor Padilla, since the two debt issues were expected to default on July 1. Also helpful is the fact that it would be one less item for Padilla to worry about since he proposed a budget for 2016-2017 that provides for only $209 million of the $1.4 billion in current debt service cost.

As MarketWatch explains:

An audit report published on Thursday suggests that debt-laden Puerto Rico may be able to void some of its borrowing because politicians exceeded constitutional debt limits and their own authority.

The report, shared with MarketWatch, states that some of Puerto Rico’s debt may have been issued illegally, allowing the government to potentially declare the bonds invalid and courts to then decide that creditors’ claims are unenforceable. The scope of the audit report, issued by the island’s Public Credit Comprehensive Audit Commission, covers the two most recent full-faith-and-credit debt issues of the commonwealth: Puerto Rico’s 2014 $3.5 billion general-obligation bond offering and a $900 million issuance in 2015 of Tax Refund Anticipation Notes to a syndicate of banks led by J.P Morgan.

Money for those debt payments is not in the commonwealth’s proposed budget, either. On Tuesday Puerto Rico’s governor, Alejandro García Padilla, sent a proposed 2016-17 budget to the island’s legislature that provides for only $209 million of the $ 1.4 billion of current debt-service cost. As García Padilla told reporters at a news conference: “This is simple: either we pay Wall Street or we pay Puerto Ricans. If the legislature decides we pay Wall Street more, well, each has his responsibility. I will continue defending Puerto Ricans. Money I send to Wall Street, I do not have to provide services here.”

Puerto Rico defaulted May 1 on a portion of its $72 billion in outstanding debt, but the commission’s audit covers two debt issues expected to default on July 1. The report’s conclusions may allow the commonwealth to pursue a strategy with even more dire consequences for bondholders. The commission’s report says that Puerto Rico may have violated its constitution by borrowing to finance deficits, borrowing beyond its debt ceiling and using a refinancing technique called the “scoop and toss” to effectively exceed bond-duration limits.

Read more here.

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Shorty Dawkins

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4 comments

  1. Oh, I’ve already decided I ain’t paying any of the US debt. If somebody comes to collect their not getting a dime. They will just have to keep slow bleeding us through our own government. One day the people will have had enough but by then, it will likely be too late, as everybody will be dependent on gov for something.

  2. Remembering D-Day, June 6th

    “From 1500 to 1942 England fought seventy-eight wars, France seventy-one, Spain sixty-four, Russia sixty-one, Austria fifty-two, Germany twenty-two, China eleven, the United States (for only 167 years and not counting Indian wars) ten, and Japan nine. Do you honestly see anything on the international horizon which promises that this frequency of strife will be reduced? As long as men can be sent into battle; as long as money can be made from bloodshed; as long as masses have evil, lust-filled, covetous hearts, those who exclude God from their procedures and programs can pledge themselves a thousand times to avoid war; yet a thousand times they will break their word and conflict will come” (Walter A. Maier).

    Indeed, according to a Union College professor some years ago, for the last 3,300 years the world has known only 227 years of general peace, even though it has been estimated in recent years that, at any given time, there are some 80 minor, regional conflicts raging around the globe.

    Thus in the 1940’s Britain’s Air Chief Marshall, Sir Arthur Harris, correctly confessed, “War will go on until there is a change in the human heart.” Yet the only way that hearts could be changed will be through the gospel words of Jesus who pledges, “I make all things new” (Revelation 21:5). “I will put a new spirit within them, and take the stony heart out of their flesh” (Ezekiel 11:19).

    Hence “if in the past, world leaders had been moved by God’s Son rather than by selfish interests; if before hurrying to slaughter, they had hastened to prayer; if only one small per cent of the hundreds of billions devoted to kill men had been used to keep their souls alive in Jesus, many struggles could have been avoided, and millions, murdered in mass destruction, would still know the joy of life” (Walter A. Maier).

    So while today, seventy-two years after D-Day, our military men still are struggling on foreign fronts, not in the sands of Normandy, to be sure, but in the other sands of the Middle East and of Afghanistan, may repentance and gospel faith in Jesus Christ be exerted on the home front to move the hand of God for their protection and safe return home!

    Gene Urtel – The Rivertown Press

    1. “Do you honestly see anything on the international horizon which promises that this frequency of strife will be reduced? ”

      It is now, as it always has been, up to us.

      James Madison, Federalist 39: “Each State, in ratifying the Constitution, is considered as a sovereign body, independent of all others, and only to be bound by its own voluntary act. In this relation, then, the new Constitution will, if established, be a FEDERAL, and not a NATIONAL constitution.” (It was established.)

      Here in America, following the Constitution of the United States of America WILL stop the unlawful wars of aggression except in REALLY defending our nation from attack instead of attacks from within.

      Well, it will take educating the people in our legitimate government, and what those who serve within them are allowed to do, forbidden to do, and allowed to do ONLY under specific circumstances and in specific named ways. All this is found in writing within the highest contract of those that serve within our governments from the smallest position to the largest are Oath bound to, That ALL authority that was delegated is found within the US Constitution and each state’s Constitution. That if it is not named as either an authority delegated to, an authority NOT delegated, or an actual “forbidden”, then it was never delegated to either the feds or the state governments but was retained by the people themselves.

      Then there is the Separation of Powers that is the bedrock upon which our nation stands. Th delegated authorities were not only separated between different branches and to named specific offices, but also between state and federal governments. Yet those who serve within both have gone against our US Constitution, the authorities delegated to them, and act as if we one government. We are not, we are comprised of many governments – 50 state governments, and one state representative government that is to represent the people of each state’s will regarding foreign affairs. Do you see how far off base this has gone?

      Alexander Hamilton here makes clear that any thing done by those who SERVE WITHIN OUR GOVERNMENTS – state and general (federal) – that is not delegated to the branch or office in which they serve fake, “color of law”, and NOT BINDING on the American people.

      Alexander Hamilton: “Every act of a delegated authority, contrary to the tenor of the commission under which it is exercised, is void. No legislative act, therefore, contrary to the Constitution, can be valid. To deny this, would be to affirm, that the deputy is greater than his principal; that the servant is above his master; that the representatives of the people are superior to the people themselves; that men acting by virtue of powers, may do not only what their powers do not authorize, but what they forbid.”

      So what does that mean under our legitimate government? Probably 75 – 85% of all laws/regulations/codes/treaties/etc created in the last 80 years are NOT lawful and binding on the American people because what those who serve within our governments can do are found in written contracts – US Constitution and state Constitutions – that define what authority those positions have.

      Some examples:

      Federal Reserve, dollar: They are forbidden to have any “money” that is not backed by silver and gold; nor are they allowed to give the duty(ies) of the legislative branch to any other person, branch, foreign entity, corporation, etc.

      The same goes for the law making abilities – the US Constitution and most, if not all, state Constitution delegates the authority to create legislation to the House of Representatives and the Senate, no one else.

      James Madison, Federalist 46: “The Foederal and State Governments are in fact but different agents and trustees of the people, instituted with different powers, and designated for different purposes… They must be told that the ultimate authority, wherever the derivative may be found, resides in the people alone; and that it will not depend merely on the comparative ambition or address of the different governments, whether either, or which of them, will be able to enlarge its sphere of jurisdiction at the expence of the other. Truth no less than decency requires, that the event in every case, should be supposed to depend on the sentiments and sanction of their common constituents.”

      James Madison, Federalist 14: “In the first place, it is to be remembered, that the general government is not to be charged with the whole power of making and administering laws. Its jurisdiction is limited to certain enumerated objects, which concern all the members of the republic, but which are not to be attained by the separate provisions of any”.

      James Madison, Federalist 45: “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several states will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement and prosperity of the State.”

      James Madison: “The power to declare war, including the power of judging the causes of war, is fully and exclusively vested in the legislature … the executive has no right, in any case, to decide the question, whether there is or is not cause for declaring war.”

      George Washington: “The constitution vests the power of declaring war in Congress; therefore no offensive expedition of importance can be undertaken until after they shall have deliberated upon the subject and authorized such a measure.”

      James Madison: “In time of actual war, great discretionary powers are constantly given to the Executive Magistrate. Constant apprehension of War, has the same tendency to render the head too large for the body. A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence against foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people.”

      James Madison: “Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied: and all the means of seducing the minds, are added to those of subduing the force, of the people. The same malignant aspect in republicanism (small “r”) may be traced in the inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and in the degeneracy of manners and of morals, engendered by both. No nation could preserve its freedom in the midst of continual warfare.

      Lets add to that problem alliances, what did the framers and forefathers say we were to do – or not do?

      George Washington: “It is our true policy to steer clear of entangling alliances with any portion of the foreign world. The great rule of conduct for us in regard to foreign nations is, in extending our commercial relations, to have with them as little political connection as possible.”

      Thomas Jefferson: “I have ever deemed it fundamental for the United States never to take active part in the quarrels of Europe. Their political interests are entirely distinct from ours. Their mutual jealousies, their balance of power, their complicated alliances, their forms and principles of government, are all foreign to us. They are nations of eternal war. “

      John Quincy Adams: “America does not go abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She well knows that by enlisting under other banners than her own, were they even the banners of foreign independence, she would involve herself beyond the power of extrication in all the wars of interest and intrigue, of individual avarice, envy and ambition, which assume the colors and usurp the standards of freedom.”

      Thomas Paine: “Not a place upon earth might be so happy as America. Her situation is remote from all the wrangling world, and she has nothing to do but to trade with them.”

      Thomas Jefferson: “Peace, commerce and honest friendship with all nations; entangling alliances with none.”

      Alexander Hamilton: “Foreign influence is truly the Grecian horse to a republic. We cannot be too careful to exclude its influence.”

      Can you name the authorities delegated in writing to the PEOPLE themselves to do that are found within the US Constitution? It was done so to make it clear that those particular powers are FORBIDDEN to those who serve within our governments.

      Our standing (permanent) military is a “forbidden”, as they are to be the Militia of the people. With undeclared by congress wars none of it is lawful, nor is it binding on Americans. They (US military, if any US instead of UN military is left) are supposed to train as they have been trained, except adding in the US Constitution and their state’s Constitution.

      James Madison, Father of the US Constitution: “… large and permanent military establishments … are forbidden by the principles of free government, and against the necessity of which the militia were meant to be a constitutional bulwark.”

      “What, Sir, is the use of a militia? It is to PREVENT THE ESTABLISMENT OF A STANDING ARMY, the bane of liberty….” Rep. Elbridge Gerry of Massachusetts, floor debate over the 2nd Amendment, I Annals of Congress

      Thomas Jefferson, 1st inaugural, explained that: “a well-disciplined militia” is “our best reliance in peace and for the first moments of war, till regulars may relieve them” and also a guarantee of “the supremacy of the civil over the military authority; [and] economy in the public expense.”

      Tench Coxe: “Who are the militia? are they not ourselves. Is it feared, then, that we shall turn our arms each man against his own bosom. Congress have no power to disarm the militia. Their swords, and every other terrible implement of the soldier, are the birth-right of an American…The unlimited power of the sword is not in the hands of either the federal or state governments but, where I trust in God it will ever remain, in the hands of the people.”

      Samuel Adams: “Under every government the last resort of the people, is an appeal to the sword; whether to defend themselves against the open attacks of a foreign enemy, or to check the insidious encroachments of domestic foes. Whenever a people … entrust the defence of their country to a regular, standing army, composed of mercenaries (paid soldiers), the power of that country will remain under the direction of the most wealthy citizens.
      And that the said Constitution BE NEVER CONSTRUED TO AUTHORIZE CONGRESS TO infringe the just liberty of the press, or the rights of conscience; OR TO PREVENT THE PEOPLE OF THE UNITED STATES, who are peaceable citizens, FROM KEEPING THEIR OWN ARMS; OR TO RAISE STANDING (permanent) ARMIES, unless necessary for the defense of the United States, or of some one or more of them; or to prevent the people from petitioning, in a peaceable and orderly manner, the federal legislature, for a redress of grievances; OR TO SUBJECT THE PEOPLE TO UNREASONABLE SEARCHES AND SEIZURES OF THEIR PERSONS, PAPERS OR POSSESSIONS”.

      Samuel Adams: “It is always dangerous to the liberties of the people to have an army stationed among them, over which they have no control … The Militia is composed of free Citizens. There is therefore no danger of their making use of their Power to the destruction of their own Rights, or suffering others to invade them.”

      Justice Story, Associate Justice, Supreme Court wrote: “The next amendment is: “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.
      “The importance of this article will scarcely be doubted by any persons, who have duly reflected upon the subject. The militia is the natural defence of a free country against sudden foreign invasions, domestic insurrections, and domestic usurpations of power by rulers. It is against sound policy for a free people to keep up large military establishments and standing armies in time of peace, both from the enormous expenses, with which they are attended, and the facile means, which they afford to ambitious and unprincipled rulers, to subvert the government, or trample upon the rights of the people. The right of the citizens to keep and bear arms has justly been considered, as the palladium of the liberties of a republic; since it offers a strong moral check against the usurpation and arbitrary power of rulers; and will generally, even if these are successful in the first instance, enable the people to resist and triumph over them”.

      US Constitution, Article I, Section 8, Clause 11: “To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water”.

      The congress has the duty to grant Letters of Marque and Reprisal when they are needed to enforce the US Constitution, the laws, or to defend the people and the nation. This is using private citizens in their own privately owned crafts to defend the USA and her people, this is using the Militia.

      Clause 12 specifies that there shall be no military beyond that of two years. The Militia of each state is charged with our nations defense here within the USA until and unless the congress has declared war and a military is raised from their ranks (that is why the requirement to be trained as the military is trained):

      Article 1, Section 8, Clause 12: “To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years”.

      There was/is not to be a Pentagon, a Military Industrial Complex lawfully. The congress still funding it are PERSONALLY responsible for the money spent (*misappropriation of funds – so we can take whatever they own from them if they are found guilty in a real, constitutional court of law with a jury of the people).

      *Misappropriation n. the intentional, illegal use of the property or funds of another person for one’s own use or other unauthorized purpose, particularly by a public official. Blacks Law Dictionary, 5th edition

      Alexander Hamilton, Federalist 33: “…If the federal government should overpass the just bounds of its authority and make a tyrannical use of its powers, the people, whose creature it is, must appeal to the standard [The Constitution] they have formed, and take such measures to redress the injury done to the Constitution as the exigency may suggest and prudence justify….”

      Some things to consider;

      Justice William O. Douglas, Terminiello v. City of Chicago (1949): “The vitality of civil and political institutions in our society depends on free discussion… It is only through free debate and free exchange of ideas that government remains responsive to the will of the people and peaceful change is effected. The right to speak freely and to promote diversity of ideas and programs is therefore one of the chief distinctions that sets us apart from totalitarian regimes.”

      Justice William Brennan, Texas v. Johnson (1989): “If there is a bedrock principle underlying the First Amendment, it is that government may not prohibit the expression of an idea simply because society finds the idea offensive or disagreeable.”

      St. George Tucker: “The Federal Government is the creature of the States. It is not a party to the Constitution, but the result of it – the creation of that agreement which was made by the States as parties. It is a mere agent, entrusted with limited powers for certain objects; which powers and objects are enumerated in the Constitution. Shall the agent be permitted to judge of the extent of his own powers, without reference to his constituent?”

      That shows you just how corrupt and unAmerican those who serve within our governments are today, and over the last 70 or so years. The FCC was created to PREVENT monopolies, instead they assisted in there creation – Treason?

      Our state borders are to be defended by the Militia, and only if they cannot control the invasion is those who serving congressional critters within the general government to make the call to get Militias from other state across the nation there assisting in the defense.

      Federal Immigration and National Act of 1952 was ran through Congress by Truman in the closing days of his administration. Basically what it says under Section 8 USC 1324[a](1)(A)[iv][b](iii) any US citizen that knowingly assists an illegal alien, provides them with employment, food, water or shelter has committed a felony. City, county or State officials that declare their jurisdictions to be “Open Cities, Counties or States are subject to arrest; as are law enforcement agencies who chose not to enforce this law. Police officers who ignore officials who violate Section 8 USC 1324[a](1)(A)[iv][b](iii) are committing a Section 274 federal felony. What this means is if you live in a city, county or State that refuses to enforce the law for whatever reason, the officials making those rules are financially liable for any crime committed within their jurisdiction by an illegal alien; and they can be fined, imprisoned if found guilty in a (real) court of law.

      Try to understand our nation under the US Constitution. There would be no political parties. All people who meet the written requirements can run for office.
      We would not be in continued undeclared wars of agression, with a military that is the biggest drain on our finances.
      We would not have unauthorized, hidden agendas.
      No First Degree Murder powers called “assassination powers”.
      We would be “allies” to none, but friends and trade with all other nations.
      Free Trade, etc are all actions against the American people and they would not exist.
      Our borders would be defended by us.
      There would be no militarized law enforcement, no BLM, DHS, IRS, FBI, CIA, FCC, TSA, etc, etc, etc, etc…
      Those who are corrupt within our governments, etc would be prosecuted, removed.
      The corporations, banks would not be doing the things they do here now – and truthfully, we should KICK them out of our nation, and not allow anything they sell to be sold here.
      There would be no spying on Americans everywhere, including within their homes.
      There would be no yearly “property taxes”.
      No one would tell you what to do with your property or how to improve it.
      Shortness of water, food, power, etc means that foreign owned, or mostly foreign owned lose any water, food, power, etc FIRST, then our government agencies, then businesses, then the people in that order.
      There would be no regulations beyond that you cause no damage or injuries; and that you are responsible for those things if they happen.
      There would be no “civil forfeiture”, etc.
      We would not have traitors serving who try to force other nations to do what they want them to do using our people as fodder.
      WE, and our children, would take the responsibility we are to have here, train, be the Militia, the knowledgeable juries, Grand Juries, education, elections, those that serve within our governments, etc.
      Starting businesses would not break us, nor would building our homes etc.
      We would watch out for our lands across our nation.
      Lawful immigrants would not only learn English, but they would be required to learn and understand our way of government.
      Etc

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