You cannot sustain an entire state’s economy on ziplines and piña coladas. Greece is, of course, learning that on something of a national scale. When you pay everyone for everything they do regardless of whether they do it or not, and rely on the occasional tourist with a Groupon Getaway to create most of your GDP, things go south really quickly, especially when your unfunded pension liabilities come due.

Puerto Rico, which has tried, repeatedly to become a state so as to make their problems ours, is $70B in debt, half of which is (surprise!) exactly the kind of unfunded public sector employee pension liability that’s dogging almost every state, threatening to tank anything outside of spitting distance from a Republican governor (and, in Illinois case, even those inside). According to PR’s governor, the debt is not payable, he needs to pull the quasi-state out of a death spiral, and he has no intention of “kicking the can” down the road for future generations to handle. Since they’re technically a commonwealth, PR can’t default, so it will file Chapter 9 bankruptcy. 

Because, why the hell not.

The governor of Puerto Rico has decided that the island cannot pay back more than $70 billion in debt, setting up an unprecedented financial crisis that could rock the municipal bond market and lead to higher borrowing costs for governments across the United States.

Puerto Rico’s move could roil financial markets already dealing with the turmoil of the renewed debt crisis in Greece. It also raises questions about the once-staid municipal bond market, which states and cities count on to pay upfront costs for public improvements such as roads, parks and hospitals.

For many years, those bonds were considered safe investments — but those assumptions have been shifting in recent years as a small but steady string of U.S. municipalities, including Detroit, as well as Stockton and Vallejo in California, have tumbled into bankruptcy.

This is probably not going to end well. If Puerto Rico can’t pay its bills, it’ll have an effect on all of the U.S.’s other outstanding municipal bonds, and the hedge funds that own them won’t be happy campers about losing all that cash. I’m sure they’d rather see PR try to restructure somehow, or reorganize its finances internally, with their help, of course, in a way that makes sense for Puerto Rico’s long-term survival.