Journal opinion article Essay Example | Topics and Well Written Essays - 750 words - 2

diary opinion article - Essay ExamplePuerto anti-racketeering law debt obligations have ashamed the debt obligations of Detroit. Detroit which had 7 hundreed throusand residents went bankrupt for chain reactor up debt obligations of 18 billion dollars which were not serviced. In comparison to this, the condition of Puerto anti-racketeering law is severely annihilative with the figures of debt obligations that are unfunded in various obligations and pension funds of 3.5 million residents remaining unserviced. The debt obligation has openhanded to a whopping amount of 87 billion dollars and the administration has reached a smear where they are personnel casualty to run out of funds. The island of Puerto Rico has been expecting a bailout from the US administration in order to save their economic system. However, tangible facts indicate otherwise with news of the US brokerage firms advising investors to stay out of investing in the bonds of Puerto Rico that they plan to use to f inance their debt obligations. In order to attract the investors, Puerto Rico has issued bonds with a forecasted yield of 9.29% which exceeded that of Greece. For this reason, Puerto Rico is being referred as Greece of America. In 2008, the measures taken by the government to stabilize the economy created a situation of debt trap for the territory of Puerto Rico. The governor at that point of time undertook measures like cutting down government jobs, reducing income taxes to half as well as reducing the corporate tax rate by about 9%. These measures were undertaken by looking at the limitations of government in funding the economic investments and their abilities to welcome the aim of expenditure with an eye on the treasury. The steps were likewise taken to maintain an optimum level of fluidity in the economy and contain inflation by restoring a balance between the take on and supply in the economy. The level of government job cuts reduced the expenditure of the government in e quipment casualty of payment of salaries. Although this provided relief to the policy makers in the miserable term, the government job cuts also conduct to falling off in production volumes. The decrease in production volumes meant that the supply of goods and service decreased. The slowdown of the GDP led to the reduction in the earnings of revenues of the government. Although, the government of Puerto Rico tried to maintain stability by injecting liquidity in the economy through reduction of corporate and individual taxes, the slowdown of the income level and the earnings meant that the investments and the demands also deteriorated. The revenue earnings of the government suffered and the treasury volume got depleted over a period of time. collect to this debt trap in Puerto Rico, the government ran out of funds and the economy headed towards a debt crisis. The debt crisis of Puerto Rico is slightly various from that of Greece due to the fact that a major part of its debt obli gations are long term. Due to small short term debt obligations, the territory would get some more time to restore its financial status and date back from the debt obligations. The government has also taken austerity measures to control the situation of debt crisis. This includes an increase in the contribution of the give in from 8.275% to 10% in the pension plans. By doing this, Puerto Rico had planned to get more funds in the pension schemes that could be used to service the debt liabilities and the long term maturities could be paid with the restoration of economy in future. The measures taken by the