ON-BB924_cover0_KS_20130824010048by • August 29, 2013 • 9:25 am

This week’s issue of Barron’s finan­cial news­pa­per has Puer­to Rico as its cov­er sto­ry.  The in-depth sto­ry com­pares Puer­to Rico’s pre­car­i­ous finan­cial sit­u­a­tion to Detroit’s recent bank­rupt­cy and warns it could be 10 times worse if the island’s gov­ern­ment does the same.

Some of the key num­bers report­ed in the arti­cle are that only Cal­i­for­nia and New York State have more total debt than Puer­to Rico.  Obvi­ous­ly those states are much larg­er so Puer­to Rico’s aver­age debt per res­i­dent  “of $14,000 is 10 times the aver­age of the 50 states.”  It adds up to $70 bil­lion in debt and that is not includ­ing $30 bil­lion in unfund­ed pen­sion lia­bil­i­ties. The prospects for get­ting out from under the debt are bleak, the island’s econ­o­my has been stuck in a reces­sion since 2006 and unem­ploy­ment is over 13%.

The good news that there are  major dif­fer­ences between Puer­to Rico and Detroit. As the author Andrew Bary explains:

“Puer­to Rico has tak­en painful and polit­i­cal­ly unpop­u­lar steps to cut bloat­ed gov­ern­ment pay­rolls, raise tax­es, and shore up its bad­ly under­fund­ed pen­sion sys­tem. A new gov­ern­ment elect­ed in 2012, led by the pop­ulist Gov­er­nor Ale­jan­dro Gar­cía Padil­la, is com­mit­ted to putting Puer­to Rico and its var­i­ous bond-issu­ing author­i­ties on a stronger finan­cial footing. “

Those cuts, that have led to the strikes by gov­ern­ment employ­ees and stu­dents at the Uni­ver­si­ty of Puer­to Rico that we have read about here on the main­land.  Those cuts don’t seem so bad when put against the back­drop of the cri­sis in Detroit.

Here is a link to the whole arti­cle http://online.barrons.com/article/barrons_cover.html#text.print.

There is also a good sum­ma­ry and analy­sis here by the busi­ness jour­nal in Puer­to Rico, Caribbean Busi­ness: http://www.caribbeanbusinesspr.com/news/barrons-takes-hard-look-at-pr-finances-88092.html

Julio Sáenz was born in Rochester and grew up on Roth Street on the city’s North­east side. He was edi­tor and pub­lish­er of OC Excél­sior, the nation’s 24th largest His­pan­ic news­pa­per based in Orange Coun­ty, Calif.

Sáenz is the founder of ConX­ion, a pub­li­ca­tion start­ed in 2003 to serve the His­pan­ic com­mu­ni­ty of Rochester. Julio was named to the pres­ti­gious “20 under 40” list of the nation’s out­stand­ing news­pa­per indus­try lead­ers by Presstime Mag­a­zine in 2006. He is active in sev­er­al pro­fes­sion­al and com­mu­ni­ty ser­vice orga­ni­za­tions, includ­ing the Nation­al Asso­ci­a­tion of His­pan­ic Journalists.