December 2008: Effect of the Financial Crisis on Puerto Rico
As reported previously, the two main problems of the current financial crisis are mortgage-backed securities and credit default swaps. This triggered a massive and coordinated worldwide response. By mid-October, central banks throughout the world had implemented different measures to counter the ongoing situation including loan guarantees, bank nationalization, interest rate reductions, foreign currency sell-offs, and direct liquidity injections. The US Emergency Economic Stabilization Act (EESA), signed into law on October 3rd, designed several programs to be financed with taxpayers’ money. In principle, the total value of the rescue package is $700 billion although the overall rescue effort could easily topple more than $2 trillion. Some banking institutions in PR could benefit directly from some of these programs. Find out what these plans are and how the crisis could affect us in 2009.