Puerto Rico is trying to declare bankruptcy because it is $70B in debt. The situation isn’t sudden; but is proof that various fixes were ineffective. With 45% in poverty and 12.4% unemployment, Puerto Rico’s economy is no longer strong enough to grow itself back to health. Major creditors filed lawsuits to recover their investments, which Puerto Rico can’t readily repay. Puerto Rico’s problem is exacerbated by the fact that it has no clear designation as a state or territory. The clearest definitions may be those that are documented in the loan agreements, which potentially provide extra-governmental control of the island’s assets. As with Greece and Argentina, sovereign rights are colliding with financial institutions; a fundamental power struggle that is part of the new economy.
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