And you
don’t really want to know, do you, that Puerto Rico is on the brink of
financial doom? Why? Because for decades, every governor of either party has
followed essentially the same strategy: hire as many people as you can, pay
them marginally, allow them to do as little as possible, and borrow money to
pay for it all. So what happened?
Well, the
chicken came home to roost, and the Washington Post reported
yesterday we’re 70 billion bucks in debt. Cancel that—I just checked the
headline, and it’s not even “70 billion,” it’s “at least 70 billion.” That
makes us number three in the nation—behind California and New York. We do,
however, easily trump little Detroit, who went bankrupt at a mere 18 billion.
Pikers, obviously.
Nor is that
the only problem for today—everybody is leaving the island; in the years from
2006 to now, we’ve lost 138,000 people, most of them to the mainland, and most
of them professionals. And why not? Salaries are low, crime is high, and the
quality of life? Well, the Post
also reported that our murder rate is six times higher than the national
average.
Right—so
what’s the solution? Well, here’s what we can’t do—go bankrupt, since
apparently cities can but states cannot. Nor can we simply say “screw you” to
the investors that have bought all our bonds, since the constitution stipulates
that investors get paid before retirees and public employees. So what to do?
Here’s the Post on
the subject:
The
situation is being closely monitored by the White House, which recently named
an advisory team to help Puerto Rican officials navigate the crisis.
How bad are
things on the island? Worse, apparently, than I thought. Here’s
Caribbean Business:
The
GDB-EAI (Government Development Bank—Economic Activity Index) had returned to
growth in December 2011 for the first time since Puerto Rico’s recession began
in 2006. It showed small but consistent year-over-year gains for nearly a year
before beginning to retreat again last October. Since then, it has been on a
steadily steepening decline: falling 0.7 percent in November, 2012, 1.3 percent
in December, 2012, 1.8 percent in January, 3.1 percent in February, 3.1 percent
in March, 3.5 percent in April and 3.4 percent in May, 4.5 percent in June, 5
percent in July, and 5.4 percent in August.
So our
projection for the local economy in 2014? Instead of the minute growth
projected originally, it’s now predicted that we will shrink by .8% next year.
And if that’s not gloomy enough, consider the statement
made by somebody at Moody’s—one of the three credit rating firms that has us
one step from junk status:
“Further
weakening of economic growth could result from the additional corporate and
sales taxes, as well as increased tax compliance and enforcement measures,”
Moody’s said. “Despite the increase in much-needed recurring revenue for the
commonwealth, weaker economic conditions would also increase negative pressure
on the rating.”
A friend
who was the press secretary to two governors told me a story, once, about the
governor who charged his cabinet to go home, think long and hard about the
situation on the island, and come back the next day with a plan of action. So
they all did, and returned with in-depth analyses and ideas. At the end, only
one man was left who hadn’t spoken.
“Governor,”
he said, “I thought about it a lot, and I came to one conclusion….”
“And that
is?” asked the governor.
“Estamos
jodidos,” the advisor
replied.
We’re
screwed.
And that
was in the good old days!
