Puerto Rico is not 'America's Greece'

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Puerto Rico Is Not 'America's Greece'

Since Puerto Rico's government announced it couldn't pay back its debt, it's earned a new moniker as news organizations are quick to call it 'America's Greece."

But is the country in the same position as Greece? The answer to that is no. Not where it counts, anyway.

First off, the scale of the problem is much smaller.

Greece is a much larger economy, and its default directly affects countries across the eurozone.

"In Puerto Rico's case, hedge funds and distressed debt buyers have bought billions of the island's debt," according to Bloomberg. "And if a default hits, they will lose money. ... The United States government has much less of a reason to get financially involved in Puerto Rico."

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Puerto Rico Economy NTP
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Puerto Rico is not 'America's Greece'
SAN JUAN, PUERTO RICO - JULY 01: Tito Puente stands in the nearly empty apartment of his daughter, Yessenia Puente, as she packs up for a move to Orlando, Florida this weekend on July 1, 2015 in San Juan, Puerto Rico. Puente joins a mass exodus of people fleeing the island due to increasing economic hardships and a financial crisis that has resulted in an estimated $72 billion public debt for the Puerto Rican government, which the governor has said is unpayable. The workers for the moving company, La Rosa del Monte, said that she is number 1465 that the company has packed for Orlando since the beginning of the year. (Photo by Joe Raedle/Getty Images)
SAN JUAN, PUERTO RICO - JULY 01: A customer prepares to pay for items in a grocery store on July 1, 2015 in San Juan, Puerto Rico. The island's residents are dealing with increasing economic hardships and a financial crisis that has resulted in the government's $72 billion debt. Governor Alejandro Garcia Padilla said in a speech recently that the people will have to sacrifice and share in the responsibilities for pulling the island out of debt. Consumer tax on certain items has risen to 11.5 percent. (Photo by Joe Raedle/Getty Images)
SAN JUAN, PUERTO RICO - JULY 01: A customer prepares to pay for items in a grocery store on July 1, 2015 in San Juan, Puerto Rico. The island's residents are dealing with increasing economic hardships and a financial crisis that has resulted in the government's $72 billion debt. Governor Alejandro Garcia Padilla said in a speech recently that the people will have to sacrifice and share in the responsibilities for pulling the island out of debt. Consumer tax on certain items has risen to 11.5 percent. (Photo by Joe Raedle/Getty Images)
SAN JUAN, PUERTO RICO - JULY 01: Luis Davila with La Rosa del Monte movers pack up Yessenia Puente's apartment as she prepares to move to Orlando, Florida this weekend on July 1, 2015 in San Juan, Puerto Rico. Puente joins a mass exodus of people fleeing the island due to increasing economic hardships and a financial crisis that has resulted in an estimated $72 billion public debt for the Puerto Rican government, which the governor has said is unpayable. The workers for the moving company, La Rosa del Monte, said that she is number 1465 that the company has packed for Orlando since the beginning of the year. (Photo by Joe Raedle/Getty Images)
SAN JUAN, PUERTO RICO - JULY 01: A woman walks on the beach on July 1, 2015 in San Juan, Puerto Rico. The island's residents are dealing with increasing economic hardships and a financial crisis that has resulted in the government's $72 billion debt. Governor Alejandro Garcia Padilla said in a speech recently that the people will have to sacrifice and share in the responsibilities for pulling the island out of debt. Consumer tax on certain items has risen to 11.5 percent. (Photo by Joe Raedle/Getty Images)
SAN JUAN, PUERTO RICO - JULY 01: Luis Davila, from La Rosa del Monte movers, packs up Yessenia Puente's apartment as she prepares to move to Orlando, Florida this weekend on July 1, 2015 in San Juan, Puerto Rico. Puente joins a mass exodus of people fleeing the island due to increasing economic hardships and a financial crisis that has resulted in an estimated $72 billion public debt for the Puerto Rican government, which the governor has said is unpayable. The workers for the moving company, La Rosa del Monte, said that she is number 1465 that the company has packed for Orlando since the beginning of the year. (Photo by Joe Raedle/Getty Images)
SAN JUAN, PUERTO RICO - JULY 01: A man sleeps on the sidewalk with a dog on July 1, 2015 in San Juan, Puerto Rico. The island's residents are dealing with increasing economic hardships and a financial crisis that has resulted in the government's $72 billion debt. Governor Alejandro Garcia Padilla said in a speech recently that the people will have to sacrifice and share in the responsibilities for pulling the island out of debt. (Photo by Joe Raedle/Getty Images)
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That brings up another big difference: Puerto Rico is a U.S. territory. In contrast, Greece is its own sovereign state, which means while it chooses to use the euro, it doesn't have to.

The fear that it won't is behind the panic that has sent millions of Greeks scrambling to snap up euros while they still can.

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Greece after the referendum
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Puerto Rico is not 'America's Greece'
ATHENS, GREECE - JULY 13: Pensioners talk to bank staff as they wait to collect their pensions outside a National Bank of Greece branch in Kotzia Square on July 13, 2015 in Athens, Greece. Eurozone leaders have reportedly made an 'agreement' on the Greek debt crisis in Brussels. After lengthy talks EU President Donald Tusk tweeted that a bailout programme was 'all ready to go'. (Photo by Christopher Furlong/Getty Images)
A woman burns the flag of the ruling party Syriza, surrounded by journalists, in front of the Greek parliament in Athens, during an anti-EU demonstration in Athens calling for a no to any agreement with the creditors on July 13 , 2015. Eurozone leaders struck a deal on a bailout to prevent debt-stricken Greece from crashing out of the euro forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
Leftist protester holds a greek flag in front of the Greek parliament as they take part an anti-EU demonstration in Athens calling for a 'NO' to any agreement with the creditors on July 13, 2015. Eurozone leaders struck a deal Monday on a bailout to prevent debt-stricken Greece from crashing out of the euro, forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO / ANDREAS SOLARO (Photo credit should read ANDREAS SOLARO/AFP/Getty Images)
People read newspaper headlines in central Athens on July 13, 2015. Greece reached a desperately-needed bailout deal with the eurozone on July 13 after marathon overnight talks, in a historic agreement to prevent the country crashing out of the European single currency. The country's leftist Prime Minister Alexis Tsipras agreed to tough reforms after 17 hours of gruelling negotiations in return for a three-year bailout worth up to 86 billion euros ($96 billion), Greece's third rescue programme in five years. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/Getty Images)
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Puerto Rico won't conceivably be switching currencies anytime soon, which means its people still have purchasing power. That's something they've been using more and more recently, another contrast with Greece's situation.

But there is at least one significant similarity. In both Greece and Puerto Rico, creditors favor imposing austerity, cutting public services and raising taxes.

And in both Greece and Puerto Rico, that's something most people want to avoid.

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