Sunday, January 17, 2016

Jack Lew: Puerto Rico is in Economic Collapse But Things Could Get Even Worse



From a letter Treasury Secretary Jack Lew sent to congressional leadership on Friday:
Although there are many ways this crisis could escalate further, it is clear that Puerto Rico is
already in the midst of an economic collapse...
Puerto Rico is already in default. It is shifting funds from one creditor to pay another and has
stopped payment altogether on several of its debts. As predicted, creditors are filing lawsuits.
The Government Development Bank, which provides critical banking and fiscal services to the
central government, only avoided depleting its liquidity by halting lending activity and sweeping
in additional deposits from other Puerto Rico governmental entities. A large debt payment of
$400 million is due on May 1, and a broader set of payments are due at the end of June.

Puerto Rico has been shut out of the municipal bond market for more than two years and ran out
of the funding sources traditionally used to finance government operations more than six months
ago. In response to the crisis...
More recently, Puerto Rico has resorted to a series of onerous and unsustainable emergency
liquidity measures, including selling assets from already depleted pension funds; borrowing from
the workers compensation and other insurance funds; and withholding hundreds of millions of
dollars in tax refunds owed to its citizens. Not only do these actions affect the most vulnerable
citizens in Puerto Rico, the unpaid obligations do not go away; they simply accumulate and make
long-term recovery even harder to achieve.

The worsening fiscal and economic situation means real suffering for the people of Puerto Rico... The unemployment rate, at over 12 percent, is more than double the U.S. average.

Nearly 10 percent of the population has left since 2006. In the first six months of 2015, each
week nearly 3,000 Puerto Ricans left the Island in search of better opportunities on the mainland
Read the entire letter here. 

4 comments:

  1. Moral of the story: Socialism no matter the degree, doesn't work

    ReplyDelete
  2. The whole world will soon experience the same scenario. There is simply tooooo much debt in the world which cannot be paid. This will result in default on such a massive scale that it will be devastating for all of us. Everyone will be affected on one way or another regardless of where one lives. This was already prophecied over 2,000 years ago that it would get so bad that it would take a days wages just to buy a few loaves of bread. You can read more about this at ItsHisStory.com

    ReplyDelete
  3. The worsening fiscal and economic situation means real suffering for the people of Puerto Rico... The unemployment rate, at over 12 percent, is more than double the U.S. average the USA unemployment is more like 23% you idiot

    ReplyDelete
  4. You are correct. Batten down the hatches !

    ReplyDelete