June 2015 – GREECE – By scale alone, the financial crises rattling Greece and Puerto Rico seemingly have little in common. Greece, which late Tuesday defaulted on its loan to the International Monetary Fund, has about $263 billion in outstanding debt, while the Commonwealth of Puerto Rico has just $72 billion on the books. Yet their plights reveal striking parallels both in what led to the present turmoil and in the debilitating effects. Certainly the two are united in one way: The slow-burning decline in their respective economic well-being has long been readily apparent to anyone paying attention. Similarly, the powers that be worsened the slide by continuing to pile on more debt even as conditions in Greece and Puerto Rico deteriorated, while legal restraints narrowed the range of possible remedies.
The outcomes, too, show a remarkable — and devastating — similarity. Some 44 percent of Greeks live below the poverty line today; in Puerto Rico the figure is 45 percent. In both bases, the backdrop is a battered labor market that leaves little opportunity for younger people. Labor force participation — the share of the working-age population either in a job or looking for work — in both regions is alarmingly low, with the World Bank reporting just 53 percent of Greece’s potential workforce on the job, while in Puerto Rico is only 43 percent. That compares with just under 63 percent in the U.S., where economists express concern about the sharply lower participation rate since the Great Recession. For broader geopolitical context, consider that workforce participation in war-torn Afghanistan is 48 percent.
Pray this never happens to your country
The diminished opportunity in Greece and Puerto Rico is causing an exodus of young people, with hundreds of thousands moving abroad in hopes of finding work so they can send money home to their families. That has further eroded the tax base of both jurisdictions, undermining economic growth and making it harder to service government debt. The mass departure of young Greeks and Puerto Ricans also has left a greater percentage of older residents more likely to require public assistance, swelling the debt load. But economic misery is not all that Greece and Puerto Rico share. Possible ways to alleviate that misery are also similarly limited. Unlike a municipality like Detroit, neither government can take refuge in bankruptcy protection to help stop the downward spiral.
James Henry, a senior fellow at Columbia University’s Center on Sustainable Investment, said that bankruptcy could help get Greece and Puerto Rico off the debt treadmill and on the path to recovery. “We have bankruptcy proceedings for people and corporations, but not for sovereign nations like Greece or territories like Puerto Rico,” he said. “The eye of the bankruptcy court is on what works. If we put people in debtors’ prison, they can’t pay off their debts. We give them a clean slate so they can become productive again.” Henry thinks European central bankers and officials, who have offered only minor concessions in the months-long bailout talks with Athens, are determined to make an example of Prime Minister Alexis Tspiras. –CBS News
Seven years of an economic crisis has left debt-stricken Greece with the highest level of unemployment of any developed economy. Homelessness is rampant. The suicide rate increased by 40 percent in the first half of 2011 alone. Many Greeks are living below the poverty line, and children and families make up a significant proportion of those most vulnerable as a result of brutal austerity measures. This is well-known and well-documented. Yet one fallout of Greece’s mass unemployment is largely concealed – the rising rate of women turning to sex work to make ends meet. There are reportedly around 18,000 sex workers in Greece, up from the estimated 17,000 in 2012. According to the Greek Centre for Social Sciences and Panteion University, the number of people selling sexual services in Greece has soared by 150% during the crisis – driven by those desperate to put food on the table after the nation’s financial meltdown.
“Over the last few years, Athens has struggled with an increasing number of people who have lost their jobs, been evicted from their homes, and affected by poverty and social exclusion,” says Eva Cossé, senior research assistant for the organization Human Rights Watch. “As austerity measures have been carried out, HIV, suicide, and depression have increased and hundreds of thousands of people have been locked out of the health system altogether,” Cossé says. “Some live on the streets and others go there to find drugs or to find clients for sex work.” Although unemployment rates edged down from 27.2% to 25.4% in February, many women have been left with no other choice than sex work. Many ask for just a few euros in exchange for services, having been forced to drive down their prices because of competition. Others offer unprotected sex to boost their income. –IB Times