It might be better if we had Greece instead.
Posted on 07/21/2015 5:08:46 AM PDT by SeekAndFind
We're told that Puerto Rico is our Greece, and sometimes it seems so. The U.S. territory (its residents have been American citizens since 1917) has a heap of economic problems. Gov. Alejandro Garcia Padilla recently told the New York Times that its $72 billion debt is "not payable." To buttress the point, he commissioned a study of the island's economy by Anne Krueger, a highly respected economist who was a top official of the International Monetary Fund. Her report makes for grim reading.
Since 2005, Puerto Rico's economy has shrunk by about 10 percent. Its population is also declining, from 3.8 million in 2005 to 3.5 million now. People move to the mainland where prospects are better. The poorest U.S. state (Mississippi) has a per capita income 50 percent higher than Puerto Rico's.
[SNIP]
What Greece and Puerto Rico share is a desire for debt relief. But there are also big differences. For starters, Greece's debt (as a share of its economy) is more than double Puerto Rico's. As a matter of arithmetic, Puerto Rico's case for relief is weaker. Puerto Rico's challenge is to get economic growth up more than to get debt down. The current situation can't last indefinitely; that is, its economy can't continue shrinking while its debt continues expanding. Lenders won't lend.
Puerto Rico's debt differs from Greece's in other ways, too. Most Greek bonds were general obligations of the government. By contrast, Puerto Rico's bonds are a bewildering array of securities issued by different agencies with varying legal protections and funding sources. "There are 17 different bond issuers in Puerto Rico," says Farrow. This complicates matters. It virtually eliminates the prospect of a general default - or the likelihood of across-the-board debt relief. Still, Congress should pass legislation permitting agencies into bankruptcy.
(Excerpt) Read more at realclearmarkets.com ...
I think article misses the point, both places are killed by very strong currencies.
As a result they require huge cash infusion forever, or their own currency.
Puerto Rico flushed debt money on welfare state instead of infrastructure.
If it is strategically important territory it may be worth just paying the cash infusion forever. If not then not.
It might be better if we had Greece instead.
I’ve lived in PR for years for work.
About half the people in PR live off the land and don’t really need much money. They have homesteads for generations without any property taxes. Sometimes they’ll sell food for electricity and water but that’s about it.
These people don’t need to “work” to buy junk and pay off imaginary loans. They cannot be enslaved as it is so the “economy” looks poor to the banking cartel.
Most of the USA lived this way until the tax man started asking for arbitrary amounts of gold to keep your land (which increases every year).
RE: It might be better if we had Greece instead.
I’ll second that with one proviso — WITHOUT THE DEBT.
A slum that hasn’t existed since the 1970s. That’s not very honest of you, to portray Puerto Rico like that.
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