— See Image Source.
I typically stay away from Politics in this blog. As a matter of fact, in this blog I’ve never written a piece on such topic. But today I need to.
My Dad recently sent me a New York Times (NYT) article/opinion titled Don’t Abandon Puerto Rico (PR) that describes the current economic debacle in PR — the result of many years of bad decisions across many administrations — in my opinion, more than 30 years in the making.
Today, Puerto Rico’s government and its public corporations have a debt of over $70 billion. To put things into perspective, as of 2014 the state of Hawaii has somewhere between $11 to 18 billion in debt (source: Google Search).
But due to Puerto Rico’s current political status (that is, an unincorporated U.S. territory) and related laws, Puerto Rico CANNOT restructure its debt — that is, until Congress changes the law that excludes Puerto Rico from bankruptcy protection.
As the NYT article reads, “Bankruptcy protection won’t cost the US federal government any money“. And that “Similar approaches have helped the District of Columbia and New York City resolve financial problems.“.
Yes, PR’s past leadership, over many years, have caused this situation. Yes, it is up to PR to solve this debacle. Yes, more and better should’ve been done. Yes, better leadership is needed. But it is a “chicken and egg” situation: more money is needed over time, local industries have failed to flourish, things like tax break incentives for US industries are no longer available, too much dependency on the government, thus more loans are taken. Bankers and investors love this, but this is bad for the local economy for obvious reasons. This combined with bad management and spending, the result is what we are seeing today.
There are solutions to this problem and one of them is debt restructuring. But without the ability to restructure its debt, as incorporated legal entities are able to do, Puerto Rico is stuck. And the result is that PR has a debt of around $72B, and things are not going to get any better.
Click to see Google Search results for “PR Debt Restructuring”.
If you are in the US Mainland, and specially if you are from PR, please help by contacting your Congressman. Find your Congressman/woman and let them know. I just did. This approach should cost the US Federal government next to $0, nothing, nada…
Message to Congress: Don’t abandon PR. Please let the island address this severe economic situation. Allow PR to restructure its debt. As the NYT article reads: “Without an orderly process to restructure its debts, Puerto Rico and its creditors could be locked in years of litigation that would benefit no one and inflict intolerable hardships on millions of Americans.”
Update: See related article on the HuffPost: Puerto Rico Is In Serious Trouble. Here’s What You Need To Know.