Wednesday, May 3, 2017

Another Reason Puerto Rico Cannot Become A State

From the NY Times: Puerto Rico’s leadership moved on Wednesday to place the island’s debt crisis into federal bankruptcy court, making it the largest United States government entity to seek court refuge from its creditors in American history....On an island that has already been experiencing an exodus of its professionals and well-educated citizens, the move toward bankruptcy is widely perceived as another sign that Puerto Rico has lost all control of its future.The island has been in a painful recession since 2006, and previous governments dug it deeper into debt by borrowing to pay operating expenses. For the last two years, Puerto Rico has been seeking assistance from Washington, sending officials to testify before stern congressional committees and even making fast-track oral arguments before the United States Supreme Court.Puerto Rico has roughly $120 billion of bond debt and unfunded pension obligations to restructure, which dwarfs the second-largest similar episode. When Detroit went bankrupt in 2013, it set the previous record, with about $18 billion of bond debt and retirement obligations.The island’s case will not be formally called a bankruptcy, since Puerto Rico is barred from using Chapter 9, the bankruptcy route normally used by insolvent local governments. Instead, the governor of Puerto Rico, Ricardo Rosselló, petitioned for relief under Title III of a new federal law for insolvent territorial governments, called Promesa. It contains some bankruptcy provisions and has never been used before, so there is no road map to follow.
Of course, Democrats want Puerto Rico to become a state for the 3 Electoral College votes but Puerto is so screwed up, with it's finances and it's out of control crime with 18 police officers murdered since 2010-Puerto Rico makes Chicago look like Vatican City- that we should just make Puerto Rico independent and certainly not bail them.
But this also shows what may happen with the U.S. government, when the debt is so out of control, the U.S. maybe in this same situation.

1 comment:

  1. Thanks for providing us with the additional link. Puerto Rico has no road map to follow and has some bankruptcy issues. Thanks for adding more to our knowledge.