Puerto Rico can't pay it's $72B debt. Default like Greece?

[JEDI]

http://www.nytimes.com/2015/06/29/b...re-not-payable.html?smid=fb-nytimes&smtyp=cur

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.

Puerto Rico, as a commonwealth, does not have the option of bankruptcy. A default on its debts would most likely leave the island, its creditors and its residents in a legal and financial limbo.

He said that when he took office in 2012, he tried to balance the fiscal situation through austerity measures and MORE borrowing. 😱
Residents began leaving for the mainland in droves, and Puerto Rico’s credit was downgraded to junk, making borrowing extremely expensive.


PR = the next Greece?

or will the US taxpayers bail out this free loading island? 😡

 

[Jaskalas]

or will the US taxpayers bail out this free loading island? 😡

Just count it as a stimulus and the American voters will be happy as rain. It's not a bailout of Puerto Rico, it's an investment.

 

[IronWing]

Congress will bitch, moan, grandstand, scold, wag fingers, and bail them out. Being a U.S. territory has advantages.

 

[Slew Foot]

Congress will bitch, moan, grandstand, scold, wag fingers, and bail them out. Being a U.S. territory has advantages.

This

 

[unokitty]

Puerto Rico Can't Pay its Debt

The governor of Puerto Rico has decided that the island cannot pay back more than $70 billion in debt, setting up an unprecedented financial crisis that could rock the municipal bond market and lead to higher borrowing costs for governments across the United States.

Puerto Rico’s move could roil financial markets already dealing with the turmoil of the renewed debt crisis in Greece. It also raises questions about the once-staid municipal bond market, which states and cities count on...

In addition, with as much as $73 billion in debt, the island’s debt obligation is four times that of Detroit, which became the largest U.S. city to file for bankruptcy in 2012.

The implications are serious for Americans outside Puerto Rico largely because many hold island bonds in mutual funds. At one point in 2013, an estimated three out of four municipal bond mutual funds held Puerto Rican bonds, which were attractive because of their high yields and exemption from federal, state and local taxes.

Not paying your debt. Seems kind of trendy...

Uno

 

[TheSlamma]

Pretty soon bankruptcies and defaults will be as common and easy as getting a new punch card at your fav sandwich place.

Hey guys I filled this one up with debts and pet projects we can't handle, give me another.

 

[boomerang]

Congress will bitch, moan, grandstand, scold, wag fingers, and bail them out. Being a U.S. territory has advantages.

A precedent that will come back to haunt.

 

[IronWing]

A precedent that will come back to haunt.

The precedent is well established. The folks holding the notes will lobby Congress and Treasury until they get their money back.

 

[theeedude]

http://www.forbes.com/sites/robertw...tax-free-puerto-rico-stay-american-avoid-irs/

ncreasingly, Americans are ditching their passports for far off lands. In some cases, they are motivated by high taxes and America’s unique worldwide tax reporting, though that’s rarely the only issue. Yet lower taxes can be had a lot closer to home and with more security. And you don’t have to ditch your U.S. passport.

It almost sounds too good to be true. After all, aren’t U.S. citizens taxable on their worldwide income? Yes, but read on. Puerto Rico is a U.S. Commonwealth. It is part of the U.S. but in some ways still independent. It’s tax system is a hybrid, part of the U.S. and well, not.

If you can really move yourself and/or your business, you may be able to cut your income taxes down to almost nothing. You have to be careful, though. The interaction between the IRS and taxman in Puerto Rico is nuanced, requiring some Puerto Ricans to file with the IRS, some with the Puerto Rico Department of Finance, and some with both. But there are great incentives by which Puerto Rico hopes to lure American mainlanders there.

The incentives include an income tax in Puerto Rico of only 4%. Compare that to your combined federal and state income tax burden you may pay now! Legally avoid the 39.6% federal rate and the 13.3% California (or other state) rate? That sounds pretty good.

I guess trickle down didn't trickle enough 🙂

 

[cabri]

I guess trickle down didn't trickle enough 🙂

More like there is very little economic incentive.

Business are not going to relocate there - labor quality and logistics costs.

 

[theeedude]

More like there is very little economic incentive.

Business are not going to relocate there - labor quality and logistics costs.

I am sure 4% income tax generates enough revenue to invest in education to improve labor quality 😀

 

[Angry Irishman]

Guam isn't far behind.....

 

[IronWing]

Guam isn't far behind.....

See! See! It really is going to capsize!


Actually, I haven't read that Guam is having any significant fiscal problems currently.

 

[JSt0rm]

looking at beach homes there right now. I want something I can rent out and have as a vacation spot.

 

[cabri]

I am sure 4% income tax generates enough revenue to invest in education to improve labor quality 😀

4-10 years of investment to get the education quality potentially up to snuff.

So what should a business do in that time frame; subsidize its workforce imported from the mainland? 😕

 

[Jimzz]

looking at beach homes there right now. I want something I can rent out and have as a vacation spot.

Property tax's will be going up, let alone insurance will be a issue.

 

[Jodell88]

I wonder if and how this will affect the Caribbean region.

 

[Jimzz]

I wonder if and how this will affect the Caribbean region.

Not much, the Caribbean is a very poor area. Yea there are some really high priced nice areas but most is very poor.

Tourism only goes so far and when the economy is not great people cut out travel.


I traveled to PR several years ago and I liked it a lot. You get the Caribbean but also ability to rent a car and drive, us currency, etc...

 

[Jodell88]

Not much, the Caribbean is a very poor area. Yea there are some really high priced nice areas but most is very poor.

Tourism only goes so far and when the economy is not great people cut out travel.


I traveled to PR several years ago and I liked it a lot. You get the Caribbean but also ability to rent a car and drive, us currency, etc...

Poor area??? LMFAO!!!!

And your second sentence sums it up for much of the Caribbean region. Financial troubles = less tourism = economy takes a hit.

 

[HumblePie]

Guess when the ship sinks it will be time to buy some cheap beach front property there?

 

[Darwin333]

Poor area??? LMFAO!!!!

Try leaving the resort areas a few times and you will see what he means. BTW, we are talking truly poor not American poor.

 

[Jodell88]

Try leaving the resort areas a few times and you will see what he means. BTW, we are talking truly poor not American poor.

Born, raised, and still living in the Caribbean. So I think I have some idea of "poor". 😉

When I see Lambos, Ferrari's, Porches, etc driving around, I have a hard time seeing a poor island.

Of course my everyday experience may not embody the wider Caribbean.

 

[Hugo Drax]

Taxpayers will bail out PR because the bond holders are going to lobby congress and let them know who runs barter town.

 

[K1052]

Of course my everyday experience may not embody the wider Caribbean.

Understatement of the month.

A lot of PR is desperately poor.

 

[Mai72]

Raise those taxes on the middle and upper middle class.