“Billionaire hedge fund managers have called on Puerto Rico to lay off teachers and close schools so that the island can pay them back the billions it owes,” the Guardian said on July 28 on the debt crisis facing the United States' Caribbean colony.
“The hedge funds called for Puerto Rico to avoid financial default — and repay its debts — by collecting more taxes, selling [US]$4bn worth of public buildings and drastically cutting public spending, particularly on education.”
The article said the group of 34 hedge funds hired former International Monetary Fund (IMF) economists to come up with a solution to Puerto Rico’s debt crisis after the island’s governor declared its $72 billion debt “unpayable” — paving the way for bankruptcy.
The funds — also known as “vulture funds” — specialise in buying and selling “distressed debt”. The article said several have also sought to make money out of crises in Greece and Argentina, the collapse of Lehman Brothers and the near collapse of Co-op Bank in Britain.
The former IMF economists's report, For Puerto Rico, There is a Better Way, said Puerto Rico could save itself from default if it drastically cuts back on public spending.
It said the island, where 56% of children live in poverty, spent too much on education — even though the government has already closed almost 100 schools so far this year.