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Debt Crisis Threatens Puerto Rico (Wants Bailout)

From a suddenly concerned about debt New York Times:

Worsening Debt Crisis Threatens Puerto Rico

By MARY WILLIAMS WALSH | October 7, 2013

While Detroit has preoccupied Americans with its record-breaking municipal bankruptcy, another public finance crisis on a potentially greater scale has been developing off most Americans’ radar screens, in Puerto Rico.

Puerto Rico has been effectively shut out of the bond market and is now financing its operations with bank credit and other short-term measures that are unsustainable in the long run. The biggest concern is that the territory, which has bonds that are widely held by mutual funds, will need some sort of federal lifeline, an action for which there is no precedent…

"Some sort of federal lifeline" means a bailout, courtesy of the US taxpayer. (Cf. Detroit, which just got $300 million as their first bailout down payment.) But why doesn’t Puerto Rico just raise their credit limit and borrow more money? Are they stupid or something?

Puerto Rico, with 3.7 million residents, has about $87 billion of debt, counting pensions, or $23,000 for every man woman and child. That compares with about $18 billion of debt for Detroit, with a little more than 700,000 people, or about $25,000 for every person in the city. Detroit and Puerto Rico have been rapidly losing population, leaving a smaller, and poorer, group behind to shoulder the burden.

So it is the same situation the US faces writ small.

Detroit, at least, was able to seek relief in bankruptcy court, but Puerto Rico is in a legal twilight zone. Territories, like states, have no ability to declare bankruptcy. Another territory, the Northern Mariana Islands, tried in 2012, but its case was rejected…

Are there a lot of voters in the Northern Mariana Islands?

One idea being considered is that Congress might establish a financial control board, perhaps like the one that helped guide the District of Columbia through a turbulent period from 1995 to 2001. One of that board’s first steps was to appoint a financial official with power to override the mayor and City Council.

But with the federal government shut down, Mr. Donahue said, “there’s really no path.” …

You see? It’s all the fault of the government shut down. Which has now been going on for a whopping eight days.

This article was posted by Steve on Wednesday, October 9th, 2013. Comments are currently closed.

2 Responses to “Debt Crisis Threatens Puerto Rico (Wants Bailout)”

  1. Noyzmakr says:

    ….another public finance crisis on a potentially greater scale has been developing off most Americans’ radar screens…..

    It’s off our radar screens because your newspaper has failed to report it. How is that the american people’s fought?

  2. GetBackJack says:

    The IRS is a foreign Trust domiciled in Puerto Rico. Puerto Rico is the Rendition equivalent of illicit financial shenanigans of the select who are the power behind the throne which is Washington DC.

    I know, I know … but it’s true all the same.

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