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Wednesday, January 9

Jamaica's debt hurricane

Chicago Tribune: "Americans concerned about the impact of public debt on the global recovery have focused — with good reason — on Greece. Closer to home, however, the tourism mecca of Jamaica illustrates the catastrophic effects of borrowing way too much, and the painful choices that follow. This saga, less familiar than Greece's, is a lesson for lawmakers in the U.S. and elsewhere.

The Caribbean nation actually is in worse financial shape than Greece: Jamaica has more debt in relation to the size of its economy than any other country. It pays more in interest than any other country. It has tried to restructure its loans to stretch them out over more years, at lower interest rates, with no success. Such a move would be risky for its already nervous lenders. So Jamaica is trying to wangle a bailout from a skeptical International Monetary Fund. Another deadline for a potential deal just came and went last week, though negotiations continue."