The Associated Press reports high unemployment in Puerto Rico has led to high levels of home foreclosures. Hat tip to Drudge Report for the link.
The market, if allowed to operate, inexorably deals with economic problems; the process by which it happens is normally both ugly and unpleasant. Mostly banks there are selling off the non-performing loans to off-island entities which pursue foreclosures in federal courts, the article adds.
Those getting hurt are the same group of people who got hurt in the 2007 real estate crash on the mainland. Namely, those who in good times can just about afford to purchase a home but who, when times turn bad, cannot continue to make their mortgage payments.
In the long run, a wave of foreclosures is what Puerto Rico needs. It will drive down home prices and make buying there attractive to retirees from the northeast U.S. Plus it will encourge emigration of enough residents to bring the population into balance with what the tourism industry can employ.
In the short run, the level of human misery will be high. Like some diseases, Puerto Rico's economy will have to get worse before it can get better.
Those inclined to shrug off the human costs of this process should remember economist John Kenneth Galbraith's bleak observation about things being okay in the long-run. "In the long run, we are all dead," he grimly reminded us.
