The world’s attention as been on Greece, as Europe hopes its collapsing economy and its rejection of austerity measures will not pull down the rest of the Eurozone. But what happened to Greece is also happening to the American territory of Puerto Rico, whose imminent default on its $72 billion debt–most of which is owed to U.S. investors (which don’t have that much exposure in Greece)–will have a far greater effect on the American economy.
The White House is refusing to bail out Puerto Rico but is instead asking Congress to pass a law allowing the territory to declare bankruptcy. But that means the American investors will take the loss, which won’t be good for the U.S. economy. [Read more...]