Puerto Rico triggers historic default as austerity spiral deepens

America’s home-grown “Greece” is trapped in a vicious circle as a shrinking economy and an exodus of workers pushes the debt ratio through the roof

Puerto Rico has triggered the biggest municipal default in US history, risking years of bitter legal warfare with creditors and an austerity “death spiral” with echoes of Greece.

The island Commonwealth finally ran out of money on Monday after a desperate effort to stay afloat, and missed a final deadline for a $58m payment – handing over just $628,000.

It implies a sweeping default on much of its $72bn debt burden, equal to 100pc of Puerto Rico’s gross national product (GNP) and more than five times the debt ratio of California or Texas.

Russia breaks into top 5 world economies, displacing Germany

Russia has overtaken Germany as the fifth largest economy in terms of purchasing power parity, according to the latest World Bank ranking that measures 214 economies based on their 2012 GDP performance.

Russia’s oil and export driven economy is ranked fifth amongst the top ten economies in the world with $3.4 trillion in GDP. In 2011, Germany surpassed Russia in GDP with $3.227 trillion compared to Russia’s $3.203 trillion. In 2005, Russia was in eighth place.

Rank Country Purchasing Power Parity
1 United States $15.6 trillion
2 China $12.4 trillion
3 India $4.8 trillion
4 Japan $4.5 trillion
5 Russia $3.4 trillion
6 Germany $3.3 trillion
7 Brazil $2.4 trillion
8 France $2.4 trillion
9 United Kingdom $2.3 trillion
10 Mexico $2.0 trillion

The report was published last week in an annual ranking of GDP. The World Bank also updated their ranking of countries in terms of gross national product (GNP) per capita, grouping Russia in the ‘high income’ nation block, with individual yearly income of $12,616 or more. Continue reading