Americans can no longer afford to ignore the snowballing bad news from Puerto Rico: experts are warning that the island’s economic implosion might very well disturb retirement funds on the mainland. Fox News reports:
In September, Puerto Rico’s Government Development Bank announced it would cut bond sales after investors pushed the yield on Puerto Rico bonds above 10 percent. The island’s general obligation bonds have been hovering at just above near-junk status. That worries economic experts who note that many Americans’ retirement funds include Puerto Rico bonds.“It’s not just the residents of Puerto Rico” who are affected, said Tom Schatz, president of Citizens Against Government Waste, based in Washington D.C. “It’s Americans across the country who are at risk as well.”
Seemingly every economic problem (and social consequence) one can think of is glaring from the shores of the US territory, and it was only a matter of time before people on the mainland saw the consequences and started to panic. A $70 billion public debt, $37.7 billion unfunded pension liability, 14 percent unemployment, 40 percent labor participation rate (one of the world’s lowest), a ruinously high minimum wage, massive population loss, and an exodus of companies that provided the island with its only real revenue base might be too much for Puerto Rico to handle on its own.A painful and ugly debt restructuring—one that necessarily involves a reluctant mainland—is starting to look inevitable.