Puerto Rico distills 70 percent of the rum consumed in the United States. We might surmise that both borrowers and lenders were imbibing too much if they failed to foresee the island territory’s recent default. Puerto Rico has been in a recession for a decade with little sign of emergence. A chronic budget deficit, a bloated public sector, an economy in shambles and highly tax-advantaged bonds that encouraged investors to stay too long were all warning signs to observers.
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