As an individual, you spend what you have. If you spend what you don’t have, people, and I’m talking highly motivated financial-type of people, aggressively come after you. It will hurt. And sure, there are plenty of individuals in this world who have gotten themselves over their head in debt, but for the most people, most people realize that if you don’t have the money, you don’t spend it. Or their will be consequences.
In walks Puerto Rico. About ten years ago, Congress got rid of a favored tax cut which had kept many pharmaceutical companies thriving on the US territory. But after the tax cuts expired, the businesses bolted, and so did jobs and revenue.
So, in order to make up the deficits, the governor of Puerto Rico did what any good lead would – he borrowed the money so he wouldn’t have to cut spending so it would align itself with reality. Who in government wants to live in reality? Just borrow, and let the next fool worry about it.
Well, the future is here. Puerto Rico just defaulted on hundreds of millions of loan repayments. Your past will always catch up with you.
I guess Greece didn’t serve as a big enough lesson. How many hundreds of billions of Euros do they owe? Didn’t they have a more than billion loan default last summer? The Greek gods are cranky, that’s for sure, and their wrath is being felt on the beautiful home of Roberto Clemente.
What’s next? A bailout? Should the American tax payers dish out billions of dollars to keep the island afloat? Is it too much to ask to have responsible politicians who care more about a stable economy and less about a stable constituency?
I believe the answer to that, going by historical data, is YES! Politicians can’t be responsible. Is it any wonder that the country is fed up and is blowing-up the political establishment this year?
Who is it that gets caught in the cross-hairs of poorly planned government? Those who no longer have a job. Those who see “non-essential” programs like art and band cut from their schools. Those who have been promised the world and end up with a pile of debt on their shoulders which will eventually make its way to their children.
When will we ever learn? When will we spend what we have? Borrow only under extraordinary circumstances, and create an environment where innovation and the pursuit of happiness will trump the rival fears of trying to buy votes with shoddy economic schemes?
Not in my lifetime.