Puerto Rico: the Greece of the Caribbean UPDATED

Puerto Rico joins other defaulting Caribbean spots, and goes from Pearl of the Caribbean to Greecespot.

Governor: Puerto Rico near ‘death spiral’

Puerto Rico can no longer make payments on its $73 billion in debt, according to Governor Alejandro Garcia Padilla, who warns the island is perilously close to entering a “death spiral””The debt is not payable … there is no other option. This is not politics, this is math,” Garcia Padilla told the New York Times in an interview published Sunday evening. “But we have to make the economy grow. If not, we will be in a death spiral.”
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Puerto Rico’s economy has been in hot water for years, due to government overspending, high energy costs and dependence on debt.

That’s an understatement; Puerto Rico has piled on more municipal bond debt per capita than any American state, however,

Puerto Rico, as a commonwealth, does not have the option of bankruptcy. A default on its debts would most likely leave the island, its creditors and its residents in a legal and financial limbo that, like the debt crisis in Greece, could take years to sort out.

Like Greece, instead of pension cuts and reducing the size of the government payroll, García Padilla wants to leave creditors holding the bag, or, as he put it, to “share the sacrifices.”

Meanwhile, Puerto Ricans are leaving in droves.

UPDATE
Commenter Kermit is really on the money:

A lot of Puerto Rico’s problems have to do with government screwing with the marketplace. While I don’t have particulars, the refining/petrochemical complex just west of Ponce ended up closing due the commonwealth owned utility company raising rates on industrial consumers rather than other customers back around 1980.

For those unaware, fully integrated refineries exist in a symbiotic relationship with petrochemical companies. There was a nice complex which included CARCO refinery (and its petrochemicals plant) along with PPG and Union Carbide, and a few others. PPG closed its olefins cracker when the government owned utility raised the rates for industrial consumers. It was no longer viable economically to operate the large electric motors required for the ethylene and propylene compressors. This initiated a domino effect. Union Carbide had to close it’s largest complex without the olefins feedstock, CARCO had to close its refinery without the economic advantage of sale of this naphtha and other product streams to adjacent petrochemical manufacturers.

In market research for a project involving removal and refurbishing of a refinery from Puerto Rico several years ago, I found that Puerto Rico has an excellent and hardworking skilled labor force, as well as excellent machine shop repair facilities.

Government owned business needs to privatize, also hip slick and cool new technology does NOT need to be utilized at the expense of rate payers. Economically feasible technology does.