Posted on 06/29/2015 9:27:01 AM PDT by SeekAndFind
The governor of Puerto Rico has admitted that it can't keep paying down the over $72 billion worth of public debt obligations.
As a result, it finds itself in a uniquely awful position.
It can't go into bankruptcy according to its own laws, so now it has to deal exclusively with its creditors to restructure its debt.
That means it has to deal with Wall Street.
"I think the surprise was that it happened this quickly," said Brian Kelly, CEO of Connecticut-based fund Brian Kelly Capital. "We thought it would take 6 months to a year... the solution is a debt restructuring."
Of course, when you restructure an economy that's already in tatters, its ability to pay is reduced as it struggles to fulfill its obligations. It can be a vicious cycle.
And once you're in the cycle, Kelly said, "the question is: 'Is this the first domino to fall?'"
Here's the situation: Puerto Rico's economy is in recession with a 14% unemployment rate. With little money coming in, legislators were already debating major cuts to its $10 billion budget.
“My administration is doing everything not to default,” Governor Alejandro García Padilla said. “But we have to make the economy grow,” he added. “If not, we will be in a death spiral.”
But growing out of this is not an option.
(Excerpt) Read more at businessinsider.com ...
This is how.
compare it’s debt to its gdp...
gdp: $103 billion (2013)
debt: $72 billion
per capita: $20,281 (3.55m people)
that puts their gdp to debt ratio around 1 : 1.43
meanwhile, for the US federal govt:
gdp: $17.7 trillion
debt: $18.3 trillion
per capita: $57,366 (319m people)
that puts its gdp to debt ratio around 1 : 0.96
the US federal government is in MUCH worse shape.
MUCH, MUCH worse.
I think you need to turn those last two numbers around.
Which is actually worse, but accurate according to those numbers.
Peurto Rico already voted to become the 51st state, Nov 2012.
If Liberals were honest, there would be a call to drag Paul Krugman out of house and “stone him to death” /Alec Baldwin
Giving money to the government so it can hire people to do bureaucratic make work that competes with capitalism and stifles economic growth has failed everytime it is tried (which is every time a progressive gets into a position of power.
So much of the US Debt is FAKE. 29% is held by Federal Government "Trust Funds", which mean the Federal Government spent all SS and Medicare surplus and now Social Security is pay as you go. This is why the retirement age is increasing and SS will be taxed for the rich. Another 12% is owed by the Fed which uses it to control money supply.
Another 34% is owed by foriegn governments which need US Treasury to bolster current accounts and support local currency.
Wall Street will already be working on a bailout for whatever financial firms are involved. Too big to fail, don’t you know.
Just print more money!
Puerto Rico has been running a Ponzi Scheme. They promise high rates of return for investing with them. They can’t balance their budget, so they have to offer more high rate investment to pay the earlier investors.
We need to start looking at the early investors in these Ponzi Schemes. They are probably Shills being used to entice others into the Ponzi Scheme.
I’m sorry, but we are going to have to start hanging thieves. There are too many of them and they aren’t afraid of jail.
This is a government run Ponzi Scheme. It used to be the government employees would swipe some of whatever they were dealing with.
Now, they’re running government-run Ponzi Schemes.
I would trade Puerto Ricans for people from Hong Kong.
Hong Kong with twice the population and 1/8th the land mass created a economic powerhouse based on Laissez-faire capitalism.
Plus they’re willing to stand up to the Communist Chinese.
Good people to have.
RE: Just print more money!
Puerto Rico can’t do that. Uncle Same can and I bet, will.
And the D.R. Deserves this why?
Agreed.
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