Puerto Rico: The New Greece

Another bankrupt government. This one a little closer to home. https://www.nytimes.com/2017/05/06/us/puerto-rico-insolvency-business-owners-anxiety.html?partner=rss&emc=rss

Another government borrowed money that they really had no chance of paying back. And the population went along with it. Now the chickens are coming home to roost.

Faced with a $123 billion debt it cannot pay, Puerto Rico filed for a kind of bankruptcy protection on Wednesday, a move that sent shivers down the spines of everyone from bond holders fearful of staggering losses to street sweepers and public employees whose already meager paychecks are likely to dwindle.

The story – being in the New York Times – paints how bad everyone has it because of the eeeevil bankers. Or something. There is only limited discussion of the way the island ended up in these straights. For example, when the current governor, Gov. Ricardo A. Rosselló, took office, it wasn’t clear how much debt there was.

When he took office, Mr. Rosselló said his first task was to determine “how deep the rabbit hole went.” He expected a $3 billion deficit, and instead found a deficit of $7.5 billion

That is a pretty glaring lack of information.

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3 thoughts on “Puerto Rico: The New Greece

  1. I’d say there’s a fair share of blame on the lenders for not assessing their risks.

    Puerto Rico can’t print its own money, so its options are to default, which is what it sounds like they want to do, or get a Federal bailout of my money, or to cut expenses, raise taxes, and tighten their belts until they buy their way out of the hole. Well, yes, I know it’s a ridiculous suggestion, but it’s theoretically possible…

    • Can’t say about PR, but in the similar case of Greece, the Greek .gov hired a couple of Wall Street firms to cook the books pretty well so that they could qualify for entry into the Euro zone and then have access to all of that beautiful low-interest Euro money.

  2. Federal Funds and Investment contracts are for friends of these corrupted Politicians. All Funds were passed on. Oue communities never seen a dime of these funds. Now the innocent people in my Island have to suffer and pay the ultimate price.

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