The NYT reports that “After Puerto Rico’s Debt Crisis, Worries Shift to Virgin Islands”. It seems the island also has an unfunded pension crisis, much like Puerto Rico.
…[T]he debt dilemma is now most acute in the Virgin Islands — the three main islands are St. Thomas, St. Croix and St. John — where the government has been struggling ever since a giant refinery closed in 2012, wiping out the territory’s biggest nongovernment employer and a mainstay of its tax base.
Its troubles began to snowball last July, when Puerto Rico defaulted on most of its debts.
In August, Fitch downgraded the Virgin Islands’ debt to junk, citing the territory’s chronic budget deficits and habit of borrowing to plug the holes, like Puerto Rico.
More downgrades followed, and in December, Standard & Poor’s dealt the territory a rare “superdowngrade” — seven notches in one fell swoop — leaving it squarely in the junk-bond realm.
And what better way to ‘solve’ this problem than to give people fish instead of fishing poles:
Still, Mr. Mapp is contending with many of the same problems that proved too much for Puerto Rico, driving it in May to seek bankruptcylike protection under a new law for insolvent territories, known as Promesa. Puerto Rico is now embroiled in heated negotiations over how to reduce its roughly $123 billion in debts and unfunded pensions.
When Congress drafted the Promesa law last year, it made it possible for the other American territories to seek the same kind of help…
In something of a self-fulfilling prophecy, by giving territories the option to declare bankruptcy, Congress seems to have made such an outcome more likely.
“That innocuous provision, when sent to the bond market, said, ‘Here’s an escape valve for your debt obligations,’” Mr. Mapp said. “That changed the whole paradigm.”
Imagine that.
Puerto Rico has many… Puerto Ricans.
The Virgin Islands have many… well, let’s just say, ‘non-caucasians’.
Who will be next: Guam?
