Puerto Rico is Uncle Sam’s Greece
Last year I pointed out that Puerto Rico is our Greece. Over the last year, this problem was allowed to fester so that indeed the suffering Puerto Rico has now started big time. You have pointed out many times how MR predicts this situation. Like Greece, Puerto Rico is a money user, but unlike our states, these folks are at the mercy of the banks and creditors. Question: How do they pay the interest on their credit without continuous investment in that Island by their overarching government’s deficit spending? Where does their “money” come from?
This sounds EXACTLY like Greece to me: The basic structure of their economy is faulty.
“U.S. Treasury Sec. Jack Lew wrote a letter to Speaker Paul Ryan and warned that a taxpayer bailout for Puerto Rico will end up being the only option if Congress cannot pass legislation allowing Puerto Rico to restructure its debt before July 1.”
“Lew last wrote a letter in January to press Ryan and Congress to pass legislation allowing the island to restructure its $72 billion debt. Now that Puerto Rico has missed the critical May 1 payment deadline, Lew wrote Monday that “a series cascading defaults” could, and would, intensify.”
“Going forward, Puerto Rico’s $70 billion of debt is unsustainable by any measure,” Lew writes. “It simply cannot afford to pay its debt. And, with a shrinking economy because of people leaving Puerto Rico, further reductions in government spending will be difficult to implement.”
“Puerto Rico Gov. Alejandro García Padilla announced the island would not be able to pay the full $400 million debt payment that was due Monday. While the Puerto Rican government attempts to finance the first loans, the island is bracing for the looming $2 billion payment due July 1.”
“Lew warns that a taxpayer bailout may be the only option for Congress if legislation lags on the House floor.”
QED: “A recent bill proposed by House Republicans has stalled and Congress went on recess without a vote on Puerto Rico.”
Marked as spam