Puerto Rico is a collapsing economy with government now bankrupt. Too much debt, they cannot make the interest payments. Los Angeles is due for about a half million Puerto Rico immigrants.
Why did it take on so much debt?Because it could. For decades, Puerto Rico issued bonds to cover budget shortfalls, and investors snapped them up because the bonds are exempt from federal, state, and local taxes in all 50 states. Then in 1996 the territory hit an economic crossroads. Congress ended hefty tax breaks for U.S. manufacturers operating in Puerto Rico, and American firms began shuttering their operations on the island, causing the economy to slump. Instead of restructuring its economy, Puerto Rico doubled its debt over the next 10 years, and Wall Street firms made nearly $1 billion off the fees. Those bond sales let the territory's bloated government — which employs a quarter of the workforce — meet its budgets without laying people off. But the economy remained stagnant, and the government was soon overwhelmed by its vast debt obligations.Now wait, you say. These Puerto Ricans would have ended up in Los Angeles anyway. Los Angeles is the immigrant magnet. But, and here is a key point, because of the aggregation of debt to a few entities in Puerto Rican government, the marginal migration is slowed and becomes a mass migration later. This is what happened in Detroit.
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