Puerto Rico throws in the towel
– The debt is impossible to pay.
Puerto Rico’s governor says he is forced to leave the islands out of a “death spiral”. Puerto Rico, officially Estado Libre Asociados de Puerto Rico (commonwealth Puerto Rico), is an autonomous archipelago in the Caribbean, with just under four million inhabitants. Now Gov. Alejandro Garcia Padilla concluded that the commonwealth could not possibly clear the debts of around 72 billion dollars (nearly 570 billion), a recognition which, according to the newspaper will likely have far-reaching economic consequences. – The debt is not possible to pay. There are no other options. I would have liked an easier option. This is not politics, it’s math, said Padilla according to the New York Times.
Puerto Rico, as a Commonwealth and a territory under the United States, has not formally bankruptcy as an option. Default of debt, according to New York Times probably lead island state, creditors and citizens in a legal and economic limbo that could take years to resolve, that is much like the debt crisis in Greece.
Last week, the governor and members of his staff in said in an interview that they would probably try to obtain significant concessions from as many as possible of the creditors. This could include deferral of the repayment of part of the debt by up to five years or expand full schedule of repayments. The situation has come up in the shadows of what’s happening in Hellas. Not only European has issue, but if this could come as a reality for Puerto Rico, it can also heavy slow down the US Dollar. How much it would exactly effect the US dollar is hard to say, since neither the US or Puerto Rico knows how long time it would to dissolve the issue.