The economy keeps shrinking...

Gary ViP

Member since 09 April 2006

GaryViP31 March 2014 00:23:34

1845

From the article:

The island聮s economy has contracted nearly 13 percent since 2006 and is suffering from a severe population exodus, a very low labor force participation rate and high crime, all of which are hindering a potential economic recovery.

The U.S. commonwealth聮s economy also is being adversely affected by high energy prices.

Where's the light at the end of the tunnel?

NomadLawyer Serial expat

Member since 27 September 2010

NomadLawyerSerial expat31 March 2014 08:29:25

693

PR's economy is in a tailspin. It's hard to see how it can improve when the government is $70 billion in debt, which there is no chance they will ever pay off. There is no bankruptcy option for states and territories in the US Bankruptcy Code, only for municipalities (i.e. Chapter 9; e.g. Detroit), so an Argentine default is the only option. Perhaps Greece is a better example because PR doesn't have it's own currency it can de-value. PR's caught in a tailspin.

Will the US gov bail them out? I think that's unlikely.

muccijm Member

Member since 13 June 2010

muccijmMember07 April 2014 20:15:05

Interesting point Nomadlawyer.

From my point of view, PR Government will likely end offering a new debt instrument in exchange of the previously defaulted old instruments. By now, markets have already discounted the price of this previsible scenario. From then on, PR will find it hard to raise new funds in the debt markets for many years. By the way, Argentina has got none, from its default in 2002 (12 years!!).

I wish the best for my beloved Island of Enchant. Regards,

Miguel