By 2015 Federal Reserve to Swallow America’s Greece
Blogger & Freelance Writer
Last Thursday, April 26th, on the front page of Puerto Rico’s daily El Nuevo Dia it was reported economists anticipate the island’s financial implosion. Several economists were interviewed regarding the island’s debt problem and claimed that Puerto Rico’s economy is expected to collapse within no less than three years, by at least the year 2015. The island Commonwealth has borrowed as much as its constitution permits and the current debt is equal to the size of the island’s economy.
Puerto Rico is a United States Commonwealth and as a US territory, according to El Nuevo Dia, “federal intervention” may occur if the island’s economy collapses. “Federal” may be a bit misleading, however, as per the recent Dodd-Frank Reform and Consumer Protection Act, the Federal Reserve, the U.S. private central bank, would have the authority to intervene and take over corporations.
El Nuevo Dia makes it sound as if the Federal Reserve was part of the federal government ultimately failing to make the distinction. I wrote the editors of El Nuevo Dia an email respectfully requesting that they write another article to clarify some bits on the history of the Fed, its relation to national debt and the movement to abolish it, but I honestly don’t expect them to print a retraction or update their piece.
Previously in March, Kate Long posted this blog highlighting that Puerto Rico is America’s Greece. It became quite the controversy as Puerto Rico’s governor, Luis Fortuño, is a self-avowed Tea Party Republican who has publicly fought to diminish the size of government and government spending. Apparently his efforts have been too little, too late.
In spite of Governor Fortuño and his apologists, economists are almost unanimous: Puerto Rico’s debt looks like a time bomb. The island is conveniently at the very far end of the American Empire, therefore in addition to being economically marginalized it’s also culturally distinct – what happens there does not always catch the attention of mainstream media, but we should keep our eyes peeled.
If Puerto Rico’s worse case scenario materializes, it could serve as a precedent for what might happen in other U.S. territories in case of a fiscal collapse.