JUNE 05, 2015 3:32 AM ET
The island of Puerto Rico is caught in an economic crisis. While the rest of the U.S. is seeing economic growth, Puerto Rico is struggling to emerge from nine years of recession. The poor economy has spurred hundreds of thousands to leave the island.
The U.S territory is more than $72 billion in debt, running low on cash and on the verge of default.
It's led many to call it the Greece of the Caribbean. Joseph Rosenbloom, who directs municipal credit research at investment firm AllianceBernstein, laughs when asked about the comparison. It's not long ago that California and its debt problems were being compared to Greece, he says.
"I guess the comparison is similar in the sense that there is a large amount of debt and there is no clear path to what the final resolution of the problems are," Rosenbloom says. "But there are some real differences between the two."
Michael Lipsky of Matlin Patterson Global Advisers, a hedge fund, says the biggest difference is that Puerto Rico is part of the U.S.
"It's pretty clear that the New York Federal Reserve is overseeing the liquidity situation for the island of Puerto Rico," he says, and "the fact that it's American laws that we're sitting down at the table and negotiating."
There is one key difference between Puerto Rico and the rest of the U.S. The territory is prohibited from using bankruptcy to help it restructure debts. That means it has to negotiate with investors.