In recent Business Insider
articles, journalist discussed the ailing financial well being of Puerto Rico, a
commonwealth of the United States. The nation has racked up a jarring $73 billion
in debt as a result of excessive spending and little control.
The economy
is on the verge of collapsing; yet United States legislature has been doing little
to support the growing debt and the nation cannot declare Bankruptcy under
their own laws. Instead, the US legislation has had their focus on the Iran
Nuclear deal, and even the risk of a government shut down in today’s volatile
economy.
With Puerto
Rico, risking running out of cash flow by November, the governor and Puerto Rican
people are forced to seek support in non-traditional manners. The have pursued
Wall- street creditors as opposed to U.S. congress, in order to initiate a plan
for economic relief and revive the Puerto Rican economy. Wall Street creditors have not been confident
in Governor Alejandro Padilla’s forecasted plans on how to restructure the
economy and have in turn down graded the nations credit rating to CC from CCC.
Additionally creditors are blowing off his proposals as they imply that he is
asking for a debt “haircut” rather than having to pay back the full amount. In
order for Wall Street to come to the rescue, Puerto Rican citizens have to
comply with strict austerity measures and really let life get worse under these
before life gets better. This risk of worse before better is not something the
Puerto Rican people want to see, thus leaving the nation in further trouble as
they search for outside financial support. To paint a picture of how things must change
in order to receive support, Puerto Rico would hypothetically have to go to
living frugal lifestyle, one comparable to Nordic EU nations during economic
turmoil. Lifestyles that include living off little, and losing a majority of
earnings to the restructure of economy (unemployment spikes, . Puerto Rico’s
struggles come at a tough time as Greece’s debt crisis is still in the
spotlight and Puerto Rico’s debt situation bears a strong resemblance, aside
for the fact the EU is forced to help Greece and the United States is instead
leaving Puerto Rico in the hands of Wall Street sharks.
3 comments:
Without the help of the U.S, it seems as if Puerto Rico will not last long. Puerto Rico does not have a strong government or economy, so they need as much help as they can get. Hopefully these unconventionally ways that they are asking for help will work, because i do agree that there some resemblance with Greece. Citizens of Puerto Rico are looking for aid, and are not finding it and it is deeply unfortunate.
Unfortunately, when Puerto Rico became a territory of the U.S., congress decided that it would not be allowed to file for bankruptcy. This is a huge issue because the country's debt just keeps piling and piling and there is no foreseeable way to stop it. Investors are in favor of this because those who are invested in Puerto Rico, especially in bonds, are not subject to losing their investment. In order for Puerto Rico to recuperate it is going to need help from private entities, or from other governments.
This is an interesting article because Puerto Rico is not something that many citizens of the US think of on a regular basis. I've been to Puerto Rico and while I was there a few of the people I talked to said that the majority of the island wants to become a state but cannot because of this financial instability. It is a shame they aren't getting the help they need.
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