As we prepare for the Fourth of July holiday, all eyes are on Greece and Puerto Rico.

While the situation in Greece is still changing hour to hour, it appears that Greece could still default on its debt which could in turn cause a ripple effect of “contagion” to other nations.

Following Greece’s lead, Puerto Rico’s governor announced this weekend that the island’s debt is not payable. The math is simple. Puerto Rico faces a “death spiral,” said Governor Alejandro García Padilla.

Greece’s economy has been mired in recession for years. The public is fed up with austerity. Investors want big premiums to lend to a government deep in debt, with no ability to devalue its currency.

The United States has its own version of Greece in Puerto Rico, a commonwealth that is freely associated with the United States, according to Nick Timiraos of the Wall Street Journal. The U.S. commonwealth with the “long-simmering debt crisis—its $72 billion debt equals nearly 70% of its economic output, far more than any U.S. state—is about to come to a boil.”

Puerto Rico’s population “has shrunk 4.7% since 2010, and less than half the residents are in the workforce and paying taxes,” according to Timiraos of the Journal.

“Analysts believe the central government will run out of cash as soon as July, which could lead to a government shutdown, employee furloughs and other emergency measures.”

“Many analysts have concluded the island has more debt than it can afford to repay given its listless economy,” Timiraos concludes.

The situations in Greece and Puerto Rico are growing increasingly dire by the hour. Greece missed a crucial debt payment to the International Monetary Fund, the IMF said early Wednesday, deepening the Greek crisis, according to the New York Times this morning.

Meanwhile, in an indication of the urgency of the negotiations between Greece and its creditors, the Greek prime minister, Alexis Tsipras, was ready to accept the bailout terms set by Greece’s creditors, with a few changes, according to Suzanne Daley and Niki Kitsantonis of the Times, also on Wednesday.

Who knows how those negotiations will conclude? And in light of the Greek tragedy unfolding, what is the island Commonwealth to do?

A U.S. federal bailout is not happening. As a territory, Puerto Rico, unlike the city of Detroit, cannot file for bankruptcy.

The junk ratings on its debt cannot go any lower and a restructuring of debt faces legal challenges.

As the Times reported on Wednesday morning: “Even (Puerto Rico) debts that appeared to be secure now seem in jeopardy, sending hedge funds and other investors scrambling to re-examine their legal rights and potential remedies should the government push for a restructuring. A vast restructuring of the commonwealth’s bonds could scare away more risk-averse investors from buying them for many years to come, causing major problems for the hedge funds.”

Pity those investors holding Puerto Rico bonds and, even worse, highly illiquid Puerto Rico bond funds issued by UBS.

While the mainland United States is celebrating its independence this week, Puerto Rico is dealing with a financial disaster. And yes, Puerto Rico is looking a lot like America’s Greece.

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