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I can't image what the PR ppl will now do with the situation of the govt unable to provide services, increase taxes, outrageous unemployment stats and all the baggage that goes with that.
What will these people, that hold US passports do? How will it affect WWide economies? It seems to me this situation is worse than the Greek default on debt.
The effect on the global economy is going to be zero. PR is small, very small; about the size of Connecticut type of small. The world will not feel a thing. PR has been in an intense economic recession since 2006 and its immediate neighbors, particularly Dominican Republic, economies have not been affected at all by this. So if PR's closest neighbors are shielded from PR's crisis, the rest of the world will not feel a thing. Not even the rest of the US has anything to worry about PR's direct effects on them.
It will, however, shake the bonds market in the US. It may not be an end all type of scenario, but PR bonds were sold as secure types with everyone guaranteed to be paid their money plus interest. Now its known that that will not take place because PR simply doesn't have the money to pay anyone anything, plain and simple.
The situation on the island will be very intense. For a few years now PR people have been leaving the island by the boat load. Its the only US state/territory that actually lost the most population between the 2000 census and the 2010 census. Most of the people leaving are well educated young people, although entire families are packing and leaving.
The US government can easily solve this problem for PR, but the problem is that it doesn't want to.
Another problem making PR's crisis even worse is its high minimum wage, it should actually be much lower in order to be aligned with PR's economic reality.
Another problem making PR's crisis even worse is its high minimum wage, it should actually be much lower in order to be aligned with PR's economic reality.
Wages in the BVI, The Bahamas and the Cayman Islands are comparable, if not higher. That isn't the issue. Its the fact that being a US territory doesn't give it the flexibility to enact what it needs to in order to attract investment. For instance it cannot provide the type of fiscal and other income tax concessions that competing territories can.
Puerto Ricans are more skilled than Dominicans, and one only need look at the ease that this new wave of migrants are fitting into the US labor market. They however need to attract the kind of high end industries that utilize this expertise.
The other issue is a "dependency syndrome," which also ails the French Antilles. Much easier to float bonds in the US capital markets than to engage in innovative programs to make Puerto Rico the Singapore of the Americas. They let Miami/Panama take the prize for emerging as major commercial centers for the Americas. Did PR ever try to attract this business? No easier to float PR bonds.
PR should have engaged in this in the early 90s, when the 936 program was jeopardized, but they didn't. Now it might be too late.
As of now I don't see what a US flag territory does for them. It reduces their ability to engage in the type of activities that suit its interests, and it got them into this debt trap. Maybe the "Independistas" were right all along, except of course they were too left wing so.......I guess they wouldn't have been any better.
Wages in the BVI, The Bahamas and the Cayman Islands are comparable, if not higher. That isn't the issue. Its the fact that being a US territory doesn't give it the flexibility to enact what it needs to in order to attract investment. For instance it cannot provide the type of fiscal and other income tax concessions that competing territories can.
Puerto Ricans are more skilled than Dominicans, and one only need look at the ease that this new wave of migrants are fitting into the US labor market. They however need to attract the kind of high end industries that utilize this expertise.
The other issue is a "dependency syndrome," which also ails the French Antilles. Much easier to float bonds in the US capital markets than to engage in innovative programs to make Puerto Rico the Singapore of the Americas. They let Miami/Panama take the prize for emerging as major commercial centers for the Americas. Did PR ever try to attract this business? No easier to float PR bonds.
PR should have engaged in this in the early 90s, when the 936 program was jeopardized, but they didn't. Now it might be too late.
As of now I don't see what a US flag territory does for them. It reduces their ability to engage in the type of activities that suit its interests, and it got them into this debt trap. Maybe the "Independistas" were right all along, except of course they were too left wing so.......I guess they wouldn't have been any better.
Puerto Rico's problem isent about status, it's about bloated government, bureaucracy, and high local taxes. Do you have any idea what kind of hoops people have to go through to open a business in Puerto Rico? It makes Cuomo's New York look like Texas in comparison.
Puerto Rico's debt is less than a quarter of Greece's, and as a relatively small island the whole place could fall apart without having much impact on the rest of the universe.
The announcement was made so Puerto Ricans could mentally process that they need to move to the U.S. Mainland or get ready for serious belt tightening before the really hard stuff happens. Greece has been going for years, but it is only getting to be bigger news because the rest of Europe is about worn out with the Greeks when the Irish, Spanish, Portugueese, and Italians have all made serious efforts to recover from the troubles they entered at the same time Greece did.
A lot of people will move to the mainland. The government will try to get the Navy to come back and bomb Vieques again. They'll be forced to try to engage with the American people as a whole that they should come vacation in Puerto Rico instead of Jamaica, the Bahamas, and soon Cuba.
Right now Puerto Rico has about a 50/50 chance of being a significantly better or significantly worse place five years from now.
The government will try to get the Navy to come back and bomb Vieques again.
Ive strongly suspected that this is the ulterior reason why they have been dragging their feet on the redevelopment of the former Roosevelt Roads Naval Station. In fact, they just extended the master plan deadline yet again the other day.
Quote:
Originally Posted by AuburnAL
They'll be forced to try to engage with the American people as a whole that they should come vacation in Puerto Rico instead of Jamaica, the Bahamas, and soon Cuba.
This is a no brainer. I don't understand why the Puerto Rico government is so laid back about developing the tourism industry. Puerto Rico has huge advantages over other places in the Caribbean: no passport, no visas, domestic flights, same currency, federally regulated banks, hospitals, etc. And above all by spending money in Puerto Rico we are helping our own.
I think Puerto Rico will be a better place in 5 years, yes it will still lag behind the mainland but the island was well along the path to recovery when Luis Fortuno was governor. The island sank back into decline when the Democrat Alejandro Garcia Padilla beat Fortuno by half a percent in 2012. Not a coincidence.
Wages in the BVI, The Bahamas and the Cayman Islands are comparable, if not higher. That isn't the issue. Its the fact that being a US territory doesn't give it the flexibility to enact what it needs to in order to attract investment. For instance it cannot provide the type of fiscal and other income tax concessions that competing territories can.
Puerto Ricans are more skilled than Dominicans, and one only need look at the ease that this new wave of migrants are fitting into the US labor market. They however need to attract the kind of high end industries that utilize this expertise.
The other issue is a "dependency syndrome," which also ails the French Antilles. Much easier to float bonds in the US capital markets than to engage in innovative programs to make Puerto Rico the Singapore of the Americas. They let Miami/Panama take the prize for emerging as major commercial centers for the Americas. Did PR ever try to attract this business? No easier to float PR bonds.
PR should have engaged in this in the early 90s, when the 936 program was jeopardized, but they didn't. Now it might be too late.
As of now I don't see what a US flag territory does for them. It reduces their ability to engage in the type of activities that suit its interests, and it got them into this debt trap. Maybe the "Independistas" were right all along, except of course they were too left wing so.......I guess they wouldn't have been any better.
It helps some in bringing in money from federal jobs. People in the postal service, military, park service, and so on likely make significantly more than they have if they were doing the same job in an independent Puerto Rico, and there are more of these jobs available than their would be otherwise. This money in turn helps pump up the local private economy.
I'm not sure San Juan could have significantly challenged Miami to be the gateway to the Caribbean basin. Partially, not being a state gives uncertainty to any investment. Partially, Miami has better air connections to the outside world as a holdover from being the HQ of Eastern Airlines.
I definitely agree with you that an independent Puerto Rico wouldn't have been able to get this far into debt.
Puerto Rico's problem isent about status, it's about bloated government, bureaucracy, and high local taxes. Do you have any idea what kind of hoops people have to go through to open a business in Puerto Rico? It makes Cuomo's New York look like Texas in comparison.
Which is exactly about status. If PR didn't have Mummy USA to lean on they would not have a bloated government, because they wouldn't have had the access to the US capital markets to fund it. It would have to be aggressive to attract foreign investment, and so would reduce the red tape. PRs colonial status has destroyed it, much as a similar status of the French Antilles has. It has created a culture of dependency.
By the way NY is one of the economically strongest states in the USA. NYC funds much of NYS, and NYS PAYS more in federal dollars than it receives back from the Feds. NYS is spending its OWN $$$, and we would have even more of it if we didn't have to support all of those Red States which leach off the Federal gov't.
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