Greece catches a lot of attention for good reasons. Besides the implications of a failing national economy, Greece’s debt has threatened the EU and the Euro; and has yet to be resolved. Puerto Rico actually has greater debt per capita than Greece, less autonomy, fewer options, and an unfortunate shift in circumstances. Greece is sovereign. Puerto Rico is not. Puerto Rico doesn’t even have the options that Detroit has because the island is not a state. It can’t declare bankruptcy. Tax incentives ending and the Great Recession combined to catch Puerto Rico with a lot of debt, a poor economy, and a departure of manufacturers. Spending, however, remained high; which means debt remains high. Besides internal attempts at fixes, two main players are watching over the island: hedge fund managers and the Federal Reserve. One possible scenario is similar to Argentina’s problem. The non-governmental debt holders begin controlling the government’s finances, or at least trying to. Just like with Greece, there is no quick fix for Puerto Rico.
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