This was such a deep shock to the island’s economy that in May 2006, much of the government, including all the public schools, was temporarily shut down. That was the first punch. The second came when the global financial system melted down less than two years later, dramatically deepening a crisis already well underway. Broke and desperate, the Puerto Rican government turned to borrowing, in part by using its special tax status to issue municipal bonds that were exempt from city, state, and federal taxes.
