Will Puerto Rico Default?

Lawndale News Chicago's Bilingual Newspaper - Commentary

by Daniel Nardini

As the U.S. Congress fiddles, Puerto Rico may go up in smoke. Puerto Rico has a $500 million debt, and as of May 1st (a Sunday), if the Congress does nothing it could mean that Puerto Rico might default by Monday, May 2nd. The danger here is obvious—if Puerto Rico should default, then this will affect the United States in one way or another as a whole. Maybe it will not have an effect, or maybe a minor effect. Nevertheless, with a U.S. national debt of $19 trillion plus, any implosion anywhere in the U.S. economy could have a chain reaction.

It seems that there is little will among the Republican-led Congress that trying to bail out Puerto Rico should be a priority. It seems to be getting barely a yawn. It should get more than that. The recent history of what led to the Great Recession should be a lesson to us all. In my view, the collapse of the corporation Enron should have been a wake-up call. The lack of state (especially in California) and even federal regulation of this company’s practices ultimately allowed those who ran Enron to cause the company to melt down. The lack of intervention by the federal and state regulators at a critical moment set the stage for the failure to stop the meltdown of Fannie May and Freddie Mac in regards to the housing subprime mortgage crisis of 2007-2008.

Meanwhile, as the U.S. Congress sits on its hands, the debt crisis is taking its toll on Puerto Rico. Unemployment is way up (over 11 percent); homelessness is becoming a major problem with a 70 percent rise compared to six years ago before the financial crisis began, and poverty in Puerto Rico is now 47 percent of the entire population. Schools are being closed by many municipalities to save money—resulting in students being bused to larger schools. The result is serious over-crowding and poorer education. These statistics are grim, and a default on the part of Puerto Rico of its debt would have even more catastrophic results for the people. Could it trigger a far, far bigger crisis for the United States as a whole? There are too many dangerous questions and too many concerns being left unanswered, and all of this could be to the detriment of all Americans as a whole.

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