Save up to 90% on a Hartford Courant subscription. Click here to sign up now!


How to handle Puerto Rico's debt crisis

How to handle Puerto Rico's debt crisis

This has not been the best week for risky government securities. First, the Greek government failed to make a $1.7-billion payment that was due Tuesday. Then the Puerto Rican government revealed that its debt had become unsustainable, although it managed to forestall a default by making more than $1 billion in payments Wednesday. The coincidental timing aside, the situations in Puerto Rico and Greece are only superficially similar. Still, the latter's prolonged troubles and repeated rounds of brinkmanship offer Puerto Rico's creditors a lesson in how not to handle a debt crisis.

Both Puerto Rico and Greece got into trouble by borrowing money to run large budget deficits to sustain...