Implode-o-Meter News - Puerto Rico's Debt Trap by Simon Johnson

Although congressional Republicans have so far refused to allow for a judge-supervised bankruptcy process, bipartisan agreement remains possible. Democratic Senators Richard Blumenthal, Elizabeth Warren, and Charles E. Schumer have proposed legislation that would introduce a stay on creditor lawsuits until March 31, 2016. No one, including Republican Senator Chuck Grassley, Chair of the powerful Senate Judiciary Committee, believes that debt restructuring by itself will bring back growth; but extending Chapter 9 of the bankruptcy code to Puerto Rico would help.
Puerto Rico needs private-sector investment, which requires taking three steps. For starters, bureaucratic hurdles to job creation should be eliminated, including by using state-of-the-art technology to make government more transparent. Pedro Pierluisi, Puerto Rico's representative in Congress, has long emphasized this point.
Second, the cost of essential inputs for industry needs to fall. Electricity on the island is significantly more expensive than in Florida, in part because of underinvestment. More broadly, there are pressing needs for public investment to improve infrastructure, which implies great opportunities for private-sector participation. But none of this will happen until the debt overhang is removed.

Relevant:

Puerto Rico's Debt Trap by Simon Johnson