Cate Long writes the Muniland blog for Reuters, and on March 8th, 2012 she wrote a post titled,”Puerto Rico is America’s Greece”. If Puerto Rico was a state, its bonds would have the worst credit rating of any state. Yields on a 10 year Puerto Rico General Obligation (GO) bond are 0.60 percent higher than comparable bonds from Illinois (the highest yielding state GO bond). The credit rating agencies and the market were already indicating that the finances of Puerto Rico were in terrible shape. As Cate was reporting nothing “new”, she was surprised when her post went viral.
The post caught fire on Facebook, the blogosphere and got picked up by the popular daily newspaper EL NUEVO dia. Had the Governor of Puerto Rico Luis Fortuño ignored the story, or had a press conference to address the issues, the story would have remained primarily a local one.
Instead, there was a rebuttal and a personal attack.
The rebuttal (which was posted on a site associated with Governor Fortuño’s re-election effort) was very literal in its attempt to refute the headline rather than the substance of Cate’s post. It compared the finances of Puerto Rico to Portugal, Ireland, Greece, Spain and the United States. This is not a good comparison. Puerto Rico has the benefit of the US federal government, which provides a military and many social services, without having to support these services through their own Federal taxes. If Puerto Rico had to pay for these services, the local economy would completely collapse. Putting this aside, the comparison table presented on the website did not make the strongest case. Puerto Rico has the lowest per capita income of all the “countries” included ($18,000) and an unemployment rate which is higher than the US, Portugal or Ireland.
After addressing the issue of Puerto Rico’s finances, ALERTA progesista attacked the messenger (translation by google):
The Puerto Rican press sells Cate Long, who apparently is an activist Occupy Wall Street economist and financial analyst to make goods and discredit Fortuño’s economic achievements, saying that Puerto Rico is the U.S. Greece.
Why take the extra step of personally attacking a blogger?
Personal attacks usually occur when the person attacking is insecure. The Governor of Puerto Rico may be worried that if people believe Cate Long, they will stop buying Puerto Rican debt. The government needs to sell ever increasing amounts of debt both to finance an annual budget deficit and refinance maturing debt. So far, Puerto Rico has had no issues financing its debt. In fact its bond issues are way oversubscribed. However, one of the reasons that investors have confidence to buy their debt is the belief that other people will be there to refinance the debt when it matures. If investor confidence begins to falter because a blogger puts doubt in their mind, the house of cards may collapse.
Timeline Of Cate Long & Governor Puerto Rico Luis Fortuño Saga
March 8th: Cate Long posts “Puerto Rico is America’s Greece”
March 10th: PR newspaper reports on post “Puerto Rico “The Greece of The United States”
March 12th: Political website associated with PR’s Governor publishes “Greece already wishes it were Puerto Rico” which personally attacks Cate Long calling her an “Occupy Wall Street Activist”
March 13: Cate Long posts “An open letter to Puerto Rico Governor Fortuno”