The economy of Greece is teetering, and its government is working feverishly to avoid a full-scale implosion. On Monday night, Greece’s government submitted a list of awaited reform proposals that its partners in Europe, namely Germany, had demanded in exchange for continuing to fund the country for another few months, according to Alkman Granitsas and Nektaria Stamouli of the Wall Street Journal.

Essentially, Greece is in negotiations with Europe and is seeking a lifeline from the European community to bail it out. If negotiations fail, Greece’s economy could collapse.

Puerto Rico is in the same boat, and the news keeps getting worse. Indeed, Puerto Rico has significant hurdles that Greece and Detroit, which filed for bankruptcy in July 2013, never faced.

At this time, the island Commonwealth doesn’t have a “Sugar Daddy”, like Greece has with Europe, to bail it out. And unlike Detroit, as a territory Puerto Rico is not permitted to file a bankruptcy proceeding.

Pity the poor Puerto Rico bond and closed-end fund investors who have hired investment fraud lawyers to recover their losses against firms like UBS and others who peddled risky debt to them in the last several years.

February’s news is particularly stinging.

At the start of the month, Puerto Rico’s leading newspaper, El Nuevo Dia, in a front page story, declared “Puerto Rico is broke” and then dedicated a twenty page special to proving that the Island’s accumulated debt is double the generally accepted figure of $73 billion. According to the newspaper, Puerto Rico in reality has $167 billion of debt, a “frightening figure obtained by adding up interest on the debt and the deficit accumulated by retirement and public health programs.”

Then, a week-and-a-half ago, Standard & Poor’s slashed its ratings on Puerto Rico debt further into junk territory, citing the Commonwealth’s frail fiscal condition and added uncertainty over a proposed 16% tax on goods and services. The report noted that the three notch cut in Puerto Rico’s rating to B, is “five notches below investment grade.” S&P indicated that “further potential downgrades” are likely and gave it a “negative” outlook.

And last Thursday, Moody’s Investors Service also cut Puerto Rico’s debt rating further into junk territory, citing “tax revenue shortfalls and weak economic growth that may accelerate a decline in government liquidity.” Moody’s also reported that Puerto Rico has a “high probability of a default on central government debt within the next two years.”

Adding to its misery, Puerto Rico has been shot down by the judiciary. In a scrambling effort to save itself, the island Commonwealth recently passed a restructuring law that allowed government institutions like the Puerto Rico Electric Power Authority – PREPA – to restructure its debt.  Unfortunately, a federal judge recently blocked the law and declared it unconstitutional.

Like Greece, Puerto Rico is desperate. Fewer than 1 million of Puerto Rico’s 3.5 million residents have steady jobs, food costs have gone up almost 50 percent over the last 10 years, pension systems have accumulated $34 billion in unfunded liabilities and the total owed to bondholders comes to $47,800 per inhabitant, according to a report.

Separated by vast oceans, it’s unfortunate that Puerto Rico and Greece have so much in common. Greece, however, may find a way to avoid the misery that will soon swallow Puerto Rico.

Zamansky LLC are securities and investment fraud attorneys representing investors in federal and state litigation against financial institutions. For more information about Zamansky LLC, please visit