Puerto Rico’s Credit: A Notch Above Junk Status

After hearing the governors speech this past week I began to wonder where all this was leading to and why it was he was willing to bring about such stringent measures that could only hurt the islands workers and their families. Well, after doing a bit of digging I discovered that the Honorable Governor Luis Fortuño has to dance to the tune of the Piper, in this case large institutional investors! Obviously this does not include the average worker on the street; more like large corporations if you ask me. One might ask why he is taking such a risky path and the answer is simple, Puerto Rico’s credit rating is practically zip, nothing, nada!!!
Moody’s and Standard & Poor’s analysts have called Fortuno’s plans “ambitious.” They said Puerto Rico must improve its finances to avert a credit downgrade, which would plunge its debt to non-investment grade, or junk bond, levels.

So as can be seen it is the financial institutions who are calling the shots and the local workers who ultimately end up paying the price in frozen wages or forced retirement or worse still job losses. Currently the Fortuño administration is looking to cut over 30,000 government jobs. Wage and benefits will be frozen during the next two years. Something that was not seen in written reports but was heard on local TV was that homes of over $150,000.00 would have their taxes doubled.
Now here is something of interest:

He also announced plans to jump-start the economy, which has been in recession for three years, by increased infrastructure investment, providing guarantees for loans to small- and medium-sized businesses and incentives to home buyers.

This would seem to include another tax on cigarettes and liquor. Well already Cerveceriá India is pointing towards the possibility of shutting down since the new tax would push them towards bankruptcy and for those who don’t know they are the only brewery in Puerto Rico! Well, so much for maintaining local businesses! I wonder how the rum industry is going to fare over this one?

This new wave of cuts will also probably lead to new migration to the United States as reported by  The Daily Sun.
A diabolical thought just hit me, suppose this was the administrations plan all along! That might explain all the new construction going on all around the island of housing units in the $400,000.00 bracket which are obviously not for the local workers. Maybe the administration is expecting an influx of well-to-do state side individuals ( Pro-Statehooders of course ) to buy up these units and those left by the migrating Puerto Ricans. Hmmm!

I wonder what the islands economist have to say about all of this especially the governors ” ambitious plan”?

It really makes me wonder where the island is truly headed.  Are we to become another Hawaii who’s indigenous people ended up living on the fringes of society?

El Bohemio

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2 Responses to “Puerto Rico’s Credit: A Notch Above Junk Status”

  1. Chuleta Says:

    Once again Bohemio your insight amazes me but never surprises me. As for those $400,000 homes being developed on the island…where else are these poor executives from Lehman, Bear Sterns, Merryl Lynch, AIG and others going to live. They now have to downsize and go live cheaply (to them) and what better playground for them then to go and exploit some more of an island they consider to be their playground.

    Let’s face it amigo, where in the world do you know of a government that is not exploiting and profiting from the backs of hard working people like us? There is no way the US will allow an elected official of PR such as the governor to not be their puppet.

    Thanks again for a well written editorial.

  2. elbohemio Says:

    Laundered CEO’s! How diabolical! Thank You Chuleta for your input.
    El Bohemio

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