The Greece of the Caribbean

There was a time when it might have been said that Puerto Rico, in the midst of a wrenching debt crisis, was returning to its Latin roots. After all, Latin American governments were once world leaders in over-indebtedness. But the United States’ public debt now stands at over 100% of its GDP, and Detroit has just gone through bankruptcy. Perhaps Puerto Rico is, at last, becoming more American. Or perhaps it is becoming more European, given the resemblance of its debt problems to those of Greece. After the adoption of the euro, Greece was able to borrow at interest rates not much higher than those paid by northern European countries, even though its fiscal policy was worlds apart from that of Germany or Finland. The result was massive debt accumulation to fund current expenditure, not investment.