Post by Logan on May 14, 2016 10:23:51 GMT -6
With every passing day it becomes more apparent that Puerto Rico is mired in a profound and unmanageable debt crisis that it cannot solve by itself. The U.S. Congress must muster the political will to give the territory access to the same rescue tools used by American states and municipalities in the same fix.
Puerto Rico is insolvent. It faces $72 billion in debt that its 3.5 million residents simply cannot pay. It missed most of a $422 million debt payment on May 2 and faces almost certain default on another $2 billion due July 1.
How did it get in this bind? The short answer is deferred costs. Instead of setting aside money on a pay-as-you-go basis for things like pensions, infrastructure maintenance and so on, it used the money for operating expenses, and issued IOUs when revenues weren’t enough.
That’s kind of like taking out a second mortgage to fix your car. But don’t look down on Puerto Rico. Others have done it.
Read more here: www.miamiherald.com/opinion/editorials/article77308777.html
Puerto Rico is insolvent. It faces $72 billion in debt that its 3.5 million residents simply cannot pay. It missed most of a $422 million debt payment on May 2 and faces almost certain default on another $2 billion due July 1.
How did it get in this bind? The short answer is deferred costs. Instead of setting aside money on a pay-as-you-go basis for things like pensions, infrastructure maintenance and so on, it used the money for operating expenses, and issued IOUs when revenues weren’t enough.
That’s kind of like taking out a second mortgage to fix your car. But don’t look down on Puerto Rico. Others have done it.
Read more here: www.miamiherald.com/opinion/editorials/article77308777.html