The Next Financial Disaster?

Everyone is talking about Greece and they be in default of some loans but there may be an another financial disaster right in our own back yard.
From the Boston Globe:
Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.
The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.
“The debt is not payable,” García Padilla said. “There is no other option. I would love to have an easier option. This is not politics, this is math.”
It is a startling admission from the governor of an island of 3.7 million people, which has piled on more municipal bond debt per capita than any American state.
A broad restructuring by Puerto Rico sets the stage for an unprecedented test of the U.S. municipal bond market, which cities and states rely on to pay for their most basic needs, like road construction and public hospitals.

That market has been shaken by municipal bankruptcies in Detroit; Stockton, California; and other cities, which undercut long-held assumptions that local governments in the United States would always pay back their debt.
Puerto Rico’s bonds have a face value roughly eight times that of Detroit’s bonds. Its call for debt relief on such a vast scale could raise borrowing costs for other local governments as investors become more wary of lending.
Perhaps more important, much of Puerto Rico’s debt is widely held by individual investors on the U.S. mainland, in mutual funds or retirement accounts, and they may not be aware of it.  http://www.bostonglobe.com/news/world/2015/06/28/puerto-rico-governor-says-island-debts-not-payable/z9IhQcU0YSDUQV92oJDcAK/story.html
with Chicago and Illinois just about belly up and now Puerto Rico, the markets and banks may see a huge disaster in the next few years.