Puerto Rico Bankruptcy a Flashing Warning Sign for the US

schiffgold.com / BY SCHIFFGOLD / MAY 5, 2017

Puerto Rico officially plunged into bankruptcy this week. Years of accumulating debt and misguided government policies finally reached their inevitable end.

The bankruptcy means more pain for the people of Puerto Rico, as well as bondholders who have virtually no hope of ever getting their money back. But beyond that, it serves as a giant, flashing warning sign, because the truth is, the financial condition of the the US isn’t fundamentally different than that of her island territory.

Puerto Rico has racked up some $123 billion in debt, including about $74 billion in bond debt and $49 billion in unfunded pension obligations. According to the court filing, the US territory is “unable to provide its citizens effective services.”

Puerto Rico has been creeping toward this climax for nearly a year. Last summer, Congress sent a bill to President Obama’s desk crafted to help the commonwealth work its way out of its debt crisis. The bill didn’t allocate any federal funds to bail out Puerto Rico, but it did set the stage to allow the island’s government to pay back debtors at less than 100%. For all practical purposes, it created a bankruptcy process for Puerto Rico, even though the word “bankruptcy” wasn’t in the bill’s language.

And here we are.

READ MORE

The post Puerto Rico Bankruptcy a Flashing Warning Sign for the US appeared first on Silver For The People.