After Bloomberg reported that Wolfgang Schaeuble, Germany’s finance minister, joked with U.S. Department of the Treasury Secretary Jack Law about exchanging Greece for Puerto Rico, Vox did a take on why this was a wise decision by Lew. In doing so, they also debilitated the argument that Puerto Rico is the U.S.’ Greece.
“I offered my friend Jack Lew these days that we could take Puerto Rico into the euro zone if the U.S. were willing to take Greece into the dollar union,” Schaeuble said at an event in Frankfurt Thursday. Lew, the U.S. Treasury secretary, “thought that was a joke,” Schaeuble said.
But why is it a bad trade for the U.S.? Matt Yglesias explains:
Presumably Schauble was, in fact, joking, but it’s worth saying this would be a terrible trade for the United States of America. Puerto Rico is both smaller than Greece (3.5 million people versus 11 million) and considerably richer ($23,678 GDP per capita versus just $18,863).
Nor are the debt situations remotely comparable.
Puerto Rico owes about $70 billion, giving it a debt-to-GDP ratio of nearly 70 percent, while Greece owes €323 billion, or about 172 percent of Greek GDP.
Last but by no means least, while Puerto Rico is in serious trouble from the standpoint of Puerto Rico, it is not by any means posing a threat to the stability of the United States of America or the dollar as a viable economic zone.