If you think the island’s problems don’t concern you, think again. Two-thirds of pension and retirement plans in the country — including yours, most likely — are holding Puerto Rico bonds, which were sold on the assumption that the triple-tax-free securities were government-backed. All these retirement funds now collectively stand to lose billions of dollars.
There’s also a good chance that your retirement fund owns shares of companies like Banco Popular, which lost over 10% of its value the day after Garcia Padilla’s statement. On the same day, shares of another widely held company, the insurance giant MBIA (which insures Puerto Rico bonds), plunged more than 23%.
Garcia Padilla is planning to negotiate deals with the banks, hedge funds and other creditors. “This is not politics, this is math,” he told The Times.
If only that were true. While the fiscal math is indeed bleak, the reality is that the roots of Puerto Rico’s crisis are almost entirely political.