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This weekend, we found out that Puerto Rico can't pay $72 billion in debt, and may default on its financial obligations. But why is Puerto Rico suddenly back in headlines, given that the commonwealth's poor economic situation, including debt and unemployment, has been well documented?
Puerto Rico's governor transparently publicized the crisis
On Sunday, the New York Times shared comments by Governor Alejandro García Padilla which rose concerns on the same weekend that Greece's financial crisis sparked waves across European markets:
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 ...
"The debt is not payable," Mr. García Padilla said. "There is no other option. I would love to have an easier option. This is not politics, this is math."
Just because it's suddenly in the news doesn't mean that Puerto Rico's poor economic state is breaking news: the island's been mired in economic problems for years. If you want to get caught up, here's where to start.
What you should read on Puerto Rico's financial crisis
- The report (PDF) commissioned by Puerto Rico's governor Padilla
- New Yorker's James Surowiecki essay on just how fragile Puerto Rico's economy is:
... Forty-five per cent of the population lives below the federal poverty line; and there’s a fiscal crisis—a scramble to restructure debts of seventy-three billion dollars. Last year, the new governor, Alejandro Padilla, said, "We’ve proved that Puerto Rico is not Detroit and not Greece." As boasts go, that’s hardly encouraging.
- The July 2014 New York Federal Reserve's detailed study of the competitiveness of Puerto Rico's economy.
