TIME Infectious Disease

1 Million People Have a Disease You’ve Never Heard Of

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Photo Researchers—Getty Images/Photo Researchers RM

Chikungunya virus has infected over one million people this year, but Big Pharma still isn't stepping up

It’s a tale scientists are tired of telling: a disease that’s been carefully watched and studied for years is suddenly infecting an unprecedented number of people while promising drugs and vaccines sit on shelved, unfunded.

This time it’s not Ebola but a mosquito-borne disease called chikungunya, which causes debilitating joint pain and has infected more than 1 million people just this year. Originating in Africa, the virus has rapidly spread into the Caribbean and Central and South Americas, with a smattering of cases in the United States. Chikungunya is nothing like Ebola, but scientists who study it find themselves in a predicament similar to Ebola researchers: Despite decades of study, there’s still no way to treat or prevent it, due in part to a lack of interest from drug companies.

“[Chikungunya] is another example of an emerging infectious disease that we clearly have a light at the end of the tunnel for in a vaccine, and it’s pharmaceutical interest that really seems to be the road block,” says Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, who is trying to get support for a chikungunya vaccine his team developed. “It’s the big dilemma. The frustration. Back when Ebola was not on the front pages, we didn’t have very many enthusiastic pharmaceutical companies.”

MORE: TIME Person of the Year: The Ebola Fighters

In late 2013, chikungunya hit the west for the first time, in St. Martin. Now, in Puerto Rico alone, there were 10,201 reported cases from May to August 2014. In prior years, the Centers for Disease Control and Prevention (CDC) would only see an average of about 28 cases of chikungunya in the United States brought by travelers who had visited affected countries, primarily in Asia. But so far in 2014, there’s been over 1,900 recorded cases stateside.

Often, chikungunya is compared to dengue fever, but while chikungunya is not often fatal, up to 80% of people infected will show symptoms, which can be excruciating, says Dr. Pilar Ramon-Pardo, a PAHO/World Health Organization adviser in clinical management. “People cannot move because it’s so painful. There are tears in their eyes,” she says. “Sometimes there’s not an appreciation for chikungunya because it has a low fatality rate, but it’s a real public health problem. The economic impact from disability is high.”

Chikungunya was first identified in 1952 in Tanzania, and the more recent outbreaks started emerging in 2003 in East Africa, then spread into Southeast Asia, the Pacific Islands, and eventually to India, where millions of people were infected in 2006. In 2007, it touched down in Italy, at which point the CDC with the Pan American Health Organization (PAHO) doubled down to ensure countries were equipped to keep an eye on—and diagnose—the disease.

“We are very concerned about chikungunya moving into the Western Hemisphere,” says Dr. Roger Nasci of the CDC. “We have the two different species of mosquitoes in the U.S. capable of spreading the virus.” Massive outbreaks in the United States are unlikely; the temperate U.S. climate isn’t especially mosquito friendly, and widespread use of window screens and bug spray limit most Americans’ risk. Still, the disease takes a toll, and other countries are at risk of even more massive outbreaks.

Researchers at the National Institutes of Health (NIH) recently published results from a successful vaccine trial for chikungunya showing it’s safe but in order to take that vaccine to the masses, it needs to undergo an efficacy trial—and then it needs a distributor. Without a pharmaceutical partner, Fauci says a timeline for a chikungunya vaccine is “impossible to predict,” though the NIH is currently meeting with two undisclosed companies for possible partnerships.

A frequent source of funding for neglected infectious diseases, the Bill & Melinda Gates Foundation, does not have any active grants or investment in chikungunya. Meanwhile, for Fauci, getting backing for chikunhunya is a “here we go again” task of trying to churn up interest in a disease that doesn’t make headlines. “It’s a theme that continues to recur among my colleagues and I,” says Fauci.

Read next: The Unexpected Animal Group Dying from Climate Change

MONEY Travel

4 Shockingly Affordable Last-Minute Holiday Trips

Who says you have to celebrate at the homestead? This year, start a new tradition in one of these affordable getaways.

Are the usual holiday festivities feeling a little stale? This could be the perfect time to shake up your routine and celebrate the season with a much-deserved getaway. Yes, we know: Traveling at the tail end of the year is pricey. However, if you’re strategic about where and when you go, you might be surprised by just how low you can get that tab. Here you’ll find four festive trips, each with its own unique appeal. Though the destinations range from beach towns to ski meccas, they do have one thing in common: a reasonable price tag. Now that’s a gift.

 

 

  • San Juan, Puerto Rico

    This palm-lined beach in San Juan, Puerto Rico, could be your holiday vista.
    This palm-lined beach in San Juan, Puerto Rico, could be your holiday vista. Arco K. Kreder—First Light

    When to Go: Dec. 31-Jan. 7. San Juan remains relatively affordable throughout the year thanks to its airport, which has the cheapest average fares (per mile) of the 75 busiest hubs in the U.S., according to the Department of Transportation. In a recent search, flying from Chicago early on New Year’s Eve costs a manageable $550. Hotels are also affordable compared with many Caribbean hotspots. On Hotels.com, four-star properties in San Juan start at $206 a night during the first week of 2015, vs. $304 in Montego Bay, Jamaica, and $341 in Punta Cana in the Dominican Republic.

    What to Do: You can’t go wrong wandering the blue cobblestone streets of Old San Juan. Stop by the massive Castillo San Cristóbal fort ($5) and the Museo de Arte de Puerto Rico ($6), one of the Caribbean’s largest museums. On Calle del Cristo browse shops such as El Galpon, which sells authentic Panama hats (prices from $60).

    Next, head to Santurce, an up-and-coming area full of hip bars and eateries. “It’s always packed with locals,” says Ryan Ver Berkmoes, author of guidebook Lonely Planet Puerto Rico.

    Hit the beach at nearby Ocean Park and Condado. For less than $20, you can rent a chair, buy a couple of cold beers, and feast on empanadas sold by street vendors. For a wilder dose of nature, explore the hiking trails and waterfalls at El Yunque National Forest, an hour outside the city. A guided tour is $60, including transportation from San Juan.

    Interested in another good day trip? Try Playa Luquillo, the mile-long crescent of surf and sand about an hour east of San Juan. The beach here has a fun, social atmosphere and is known for its food vendors, says Ver Berkmoes. So grab a tasty fried snack and check out the scene.

    How to Celebrate: The city’s biggest New Year’s party, complete with fireworks, happens at the Puerto Rico Convention Center (discounted tickets are $65 on Gustazos.com). For something more low-key, head back to Santurce and its central square, ringed with open-air bars and cafés, to toast 2015 with a $3 piña colada.

    Jan. 6 is Día de Los Reyes, or Three Kings Day. Expect parades and festivals with food and live music (but keep in mind that some stores and restaurants will be closed).

    Where to Stay: In San Juan, Le Consulat is a great bargain in the Condado luxury district, where it’s surrounded by hotels charging upwards of $300 a night. At $127 for a double, you get free Wi-Fi, a simple, modern room, and an outdoor pool. For a bit of a splurge, Ver Berkmoes recommends spending a couple of nights at the Gallery Inn, where each room is decorated with art and antiques. Doubles start at $220 a night.

  • San Francisco

    Embarcadero, Ferry Building, San Francisco, CA.
    Skaters take a spin on the Embarcadero rink. Walter Bibikow—Getty Images

    When to Go: Dec. 19-26. Why not spend Christmas in the City by the Bay? The weather is temperate, most attractions are open, and hotel prices actually drop, says Chris McGinnis, a travel blogger for the San Francisco Chronicle. For instance, last year, rates at the city’s big convention hotels hit an annual low of $170 or less from Dec. 19 to 25, vs. a full-year average of $241, according to the visitors bureau. Plus, with the usual tourist hordes thinned, museums are less mobbed, and reservations at top restaurants are easy (or at least easier!) to snag. Flights, too, are reasonable this time of year. We found nonstop flights from Chicago starting at $305.

    What to Do: Skip touristy Fisherman’s Wharf and check out the futuristic de Young Museum ($10; closed on Dec. 25), which displays 27,000 works from the 17th to 20th centuries. Don’t miss the observation tower. It has stunning views of Golden Gate Park. Nearby, the California Academy of Sciences houses an aquarium, a planetarium, and a living rainforest dome ($35).

    The city is “brimming with sublime food,” says Michele Bigley, author of the Fodor’s San Francisco guide. In the buzzing Mission District, Bigley recommends La Taqueria for a behemoth burrito ($7) before catching a movie at the Roxie, one of the oldest theaters in the nation. Cap the night with a cocktail at Trick Dog, where drinks are named for local landmarks ($12).

    Visit the Ferry Plaza Farmers Market to see the NoCal bounty. “Occasionally you’ll spot famous chef Alice ­Waters shopping there,” says Anna Roth, food and drink editor of SFWeekly. In the same building, she recommends Hog Island Oyster Co. for seafood stew and, of course, oysters ($18 to $20).

    How to Celebrate: Through March, an art project using 25,000 LED lights will illuminate the cables of the Bay Bridge. Check it out from the amazing Top of the Mark bar on the 19th floor of the Intercontinental Mark Hopkins. For a more athletic option, glide over the city’s largest outdoor ice-skating rink, set along the waterfront on the Embarcadero ($14 with skates).

    On Christmas Eve, indulge in an old-school meal at the House of Prime Rib, a city institution. “During the holidays it’s all decked out,” says Roth. “You’ll spend $40 or so for an entrée, but at least the martinis are cheap!”

    Where to Stay: For a unique property in the heart of things, try the Herbert Hotel. Located just off Union Square, the Herbert has bright, sleek rooms (ask for one with a private bathroom) and hardwood floors. Doubles are $259 a night through Dec. 20 but drop to $155 Dec. 21–25. Prefer something with more of a neighborhood feel? The quaint San Remo Hotel offers rooms with windows from $99, though you will need to share one of several bathrooms.

  • Bacalar, Mexico

    Bacalar, Mexico
    The shallow waters of the Lagoon of Seven Colors Hugo Ortuño Suárez—Demotix/Corbis

    When to Go: Dec. 15-22. Mexico’s Yucatán Peninsula can get pretty busy at the end of the year. According to American Express Travel, Cancún is 2014’s most popular international destination for both Christmas and New Year’s. That appeal has some upsides—every major U.S. airline offers direct flights to Cancún. However, it also means crowds and, according to hotel researchers STR, a December average daily rate of $227.

    For holiday travelers, Bacalar is an escape from that tourist frenzy. This small town overlooking Laguna Bacalar, or the “Lagoon of the Seven Colors,” is 3½ hours from Cancún, and 35 minutes from Chetumal. During the holidays, ­Bacalar hotels ­average a manageable $123 on ­Hotels.com. To visit, fly into Cancún and rent a car (about $40 a day) or take the $55 bus. Flights tend to be cheaper earlier in December, says Zachary Rabinor, CEO of tour operator Journey Mexico; we found one for $414.

    What to Do: Tour Bacalar’s beautiful old Spanish fortress, Fuerte de San Felipe de Bacalar ($4, free on Sundays), originally built to protect the town against pirates. Later, hang with the locals at the town’s popular balneario (swimming facility); entry $2. The area is lined by small eateries and has plenty of thatched umbrellas where you can take a break from the Caribbean sun. Or, for just $1.50 an hour, rent a bike from Cocomoco rental shop and pedal along the bay. Obviously, you should be eating as many tacos as possible; the fish and shrimp options at La Playita are not to be missed (from $4).

    The town also makes a great base for exploring the Mayan ruins of Chacchoben ($4), a 45-minute drive away. The site, closed to the public until 2002, is home to stone structures dating to the year 800—some still showing signs of their original red paint. Mexico’s biggest cenote (a natural sinkhole), the 300-foot-deep Cenote Azul, is about a mile outside of town—the water is so clear you can see down to the sparkling-white sand floor. Entrance $1, life vests $3.

    How to Celebrate: Get in on the holiday spirit by checking out the town’s tree lighting. Then shop for locally made gifts at handicraft shops in the town center or near the entrance to the cenote. Also be sure to sample traditional Mexican Christmas goodies such as ponche (warm tropical-fruit punch stirred with cinnamon sticks), romeritos (sprigs of the romerito plant served with potatoes and mole), and bacalao (salted cod).

    Where to Stay: The recently opened Bacalar Lagoon Resort ($115) consists of seven spacious cabanas set on a freshwater lagoon; snorkeling gear is available gratis. Nearby Rancho Encantado is a great value at $125. The rooms have thatched roofs, air-conditioning, and cool tile floors. Guests can get an outdoor massage, kayak on the lagoon, or just kick back in one of the property’s many hammocks.

  • Keystone, Colo.

    Keystone, Colorado.
    Skiers take in the view of North Peak. Jack Affleck—Courtesy of Vail Resorts

    When to Go: Dec. 25-30. For a ski trip that doesn’t break the bank, Dan Sherman of Ski.com recommends Keystone, the most affordable of Colorado’s Vail Resorts properties. In late December, a single-day advance-purchase lift ticket at Keystone costs $99, compared with $129 at Vail or Beaver Creek. Plus, Keystone is just 90 minutes from Denver, allowing visitors to fly into a large airport with well-priced flights. Trim the cost of your airfare even further by flying on Christmas Day, when flights from Chicago start at $245, vs. $315 on the 24th.

    What to Do: Hit the mountain! Keystone offers an impressive mix of terrain, from “long-groomed cruisers” to the “trees and bumps of North Peak,” says Harold C. Jenkins, a travel agent at Corporate Vacations American Express Travel. The resort is also home to Colorado’s biggest night-skiing program, with the slopes open until 8 p.m. during the last week of the year. “Watching the sunset from the top of Dercum Mountain is spectacular,” says Sherman.

    Buy your lift tickets at least a week in advance; you’ll save up to 25% off same-day rates. Feeling a little rusty? Ski School lesson prices drop around 20% when you book two days ahead (about $130, though 2014 holiday prices are still being finalized). Kids 12 and under ski free, with none of the holiday blackouts you see at other resorts.

    For a break from the slopes, spend an afternoon in Breckenridge, a half-hour away. Grab ­coffee at local favorite Cuppa Joe and check out the stores and galleries in this former mining town.

    How to Celebrate: You’ve been burning calories, so go ahead and splurge on a nice meal. In the village, Ski Tip Lodge offers a four-course prix fixe ($75), with dessert served by the toasty fireplace. Or hop a gondola to Der Fondue Chessel, located at the top of North Peak. You’ll get a full Bavarian meal—including fondue, of course—for $59 a person.

    What time and place could be more appropriate for a sleigh ride? The resort offers hourlong rides that wind through Soda Creek Valley and include hot apple cider (adults, $30; kids, $20). Afterward, swing by Keystone Lodge to check out the model village carved out of chocolate.

    Where to Stay: Unlike most resorts, Keystone is just a ski area, with no standalone town. While that results in fewer off-mountain activities, it also means most lodging is just minutes from the slopes. A two-bedroom condo at the Gateway Mountain Lodge, a five-minute walk or free shuttle ride from the lifts, starts at $419 per night. (Compare that with a two-bedroom in Vail, which starts at about $900.)

    Prefer a standard hotel room? The Inn at Keystone ($235 a night for a double) is also walking distance from the slopes and has a rooftop hot tub with views of Keystone Valley.

  • What to Know Before You Go

    No matter where you’re going this season, these four air-travel strategies will save you time, money, and hassle.

    Check in the day before. Not only is online check-in your best chance at switching to a better seat (airlines release some prime spots 24 hours in advance), but if the flight is oversold, it reduces your chances of being bumped, says Wendy Perrin, travel advocate for TripAdvisor.com.

    Get in the fast lane. Planning to travel a lot in 2015 and beyond? Apply for TSA PreCheck, the program that allows you to go through expedited security lines without removing your shoes, coat, belt, or laptop. Membership costs $85 and lasts for five years.

    Load up on apps. Use your airline’s app to get the latest on your flight. MyTSA will update you on security wait times, and GateGuru is great for sussing out airport amenities.

    Bookmark flightstats.com. Canceled flight? Use this site to vet your options, says Perrin. Flightstats will show you which airports and planes are delayed so you can look for a route that works for you, rather than blindly accepting whatever the airline rep suggests.

     

MONEY municipal bonds

Muni Bonds are Beating Stocks This Year. What to Know Before You Jump In.

Municipal bonds are on a tear. On Monday The Wall Street Journal noted that the normally staid $3.7 trillion sector has returned 8.3% so far this year, outperforming the Dow Jones Industrial Average and highly rated corporate bonds. Readers of MONEY’s print edition shouldn’t be surprised. Our April issue argued these bonds could “make a bid for comeback investment of the year.” If munis are just getting your attention now, here are four things you need to know:

Munis benefit some investors more than others

Munis’ interest payments are exempt from federal and sometimes state and local income tax. That means, all other things being equal, those who pay higher tax rates enjoy a bigger benefit. Just how good a deal is it? Because municipal bond buyers are well aware of the tax perks, muni bonds typically yield less than Treasuriess. So to find out if munis make sense for you, you need to look at the difference between these two yields and compare with your tax rate.

The question can also be complicated factors like where you live and whether you are subject to the alternative minimum tax or the new Medicare tax on investment income.

But there is a basic rule of thumb. Start by subtracting your tax bracket from 1. So if you are in the 33% bracket you are left with 0.67. Then divide the municipal bond’s tax-free yield by the resulting number. Finally compare the result to the yield on a taxable investment. Right now the 10-year Treasury yields about 2.3%. Top-rated muni bonds with similar 10-year durations are yielding 2.1%. The upshot: A muni investor in the 33% tax bracket could grab an after-tax yield of 3.1%. For an investor in the 25% bracket, the after tax yield falls to 2.8%.

Munis aren’t risk free

Although munis may offer an after-tax yield advantage, it comes at a cost. While Treasuries issued by the Federal government are considered iron-clad, municipal bonds’ credit risk can range from triple-A to junk, not unlike bonds issued by companies. While you can certainly buy bonds backed by, say, the State of New York or California, many municipal bonds are issued by less august entities — a particular city or school district. Still others may be backed by a particular stream of revenues — like the tolls collected on a particular road. In all there are more than 15,000 issuers, according to Moody’s. Even counting small issuers, municipal defaults are rare. But political impasses — like the 2008 California budget deadlock — can give the markets jitters, driving down prices. Sometimes, as the news out of Detroit or Puerto Rico show, the problems really are serious.

Where you live has a lot to do with the fund you should buy.

Municipal bonds may carry state and local tax perks. For instance, income from municipal bonds issued by a particular state is typically exempt from state income taxes for residents of that state. In other words, New Yorkers who own New York bonds get a state tax break on top of their federal income tax benefits. That’s why there’s a proliferation of municipal bond mutual funds targeting individual states, especially populous and high-tax ones like New York, California, and New Jersey.

There are some wrinkles that may surprise you, though: Bonds issued by territories like Puerto Rico are exempt from state taxes everywhere. That’s helped make them far more popular than they might otherwise be. (They may even turn up in funds labelled “New York.”) So Puerto Rico’s fiscal problems have had a real impact on individual investors on the U.S. mainland.

If you’re just buying now, the deals are less attractive

Of course, while the tax benefits of municipal bonds can seem attractive, taxes should never be your only consideration for an investment. You also have to judge whether the price you’re getting will turn out to be a bargain, and the yields the bonds are offering now are looking a bit thin. (Remember, as bond prices rise, yields fall.) Muni bonds had a rough 2013, declining about 2.6% at a time when Detroit’s fiscal problems were continually making headlines. But munis haven’t just snapped back. They’ve put together their longest string of monthly gains in two decades, according to the Journal. Such a sharp rally can only mean that investors’ return prospects have gotten a lot less rosy.

“It’s difficult to find real value in the muni market these days, but if you already own munis, you should stick with what you own because it’s hard to replace that income,” Jim Kochan, a senior investment strategist at Wells Fargo Advantage Funds recently told investment bible Barron’s. “Whenever we’ve been at these yields in the past, it’s never been a good time to buy, because the market usually corrects.”

MONEY bonds

Risky Puerto Rico Funds Are Still on UBS’s Menu

UBS
Matthew Lloyd—Bloomberg via Getty Images

Brokers, according to an October memo, can recommend clients buy bond funds at the center of a recent $5.2 million settlement and hundreds of arbitration claims.

UBS is sticking with its recommendations that some clients buy risky Puerto Rico closed-end bond funds, despite hundreds of arbitration claims by investors who blame the securities for huge losses, according to an internal document.

UBS told brokers that they may continue to recommend the funds to clients following a $5.2 million settlement last week with Puerto Rico’s financial institutions regulator about sales practices involving the funds, according to an Oct. 9 internal memo reviewed by Reuters.

However, brokers “should continue to evaluate investment recommendations in a manner consistent with UBS policies and FINRA rules,” the firm said in the four-page memo, written in a question and answer format. FINRA, the Financial Industry Regulatory Authority, is Wall Street’s industry-funded watchdog.

Brokers who have questions about whether a “particular investment recommendation” is suitable should contact their branch manager or the firm’s compliance department, UBS wrote.

It is unclear who wrote the memo, which is unsigned.

A UBS spokeswoman did not say whether the firm planned to give more specific guidance to brokers. She said brokers consider “each client’s entire range of wealth management needs and goals when devising their financial plans.”

She noted that Puerto Rico municipal bonds and closed end funds provided excellent returns for more than a decade, as well as tax benefits.

FINRA requires that investment recommendations be “suitable” for investors, based on factors such as risk tolerance and age.

Lawsuits have been mounting, and there are more than 500 arbitration claims against UBS following a sharp decline in the value of Puerto Rico municipal bonds last year. Investors in closed-end funds with heavy exposure to those bonds suffered deep losses.

Puerto Rico regulators interviewed a sampling of UBS clients while looking into the firm’s bond fund sales practices. Those interviewed were elderly with low net worth and conservative investment goals, according to the settlement with UBS, also on Oct. 9. UBS did not admit to any wrongdoing as part of the deal.

According to the settlement, six UBS brokers in Puerto Rico “may have” directed their clients to improperly borrow money in order to buy the funds. Lawyers handling the arbitration cases said the investors’ losses were magnified because they invested through the illegal loans, sold through UBS Bank USA of Utah.

Even without the added leverage, analysts say funds that invest heavily in Puerto Rico debt still carry significant risk. Ratings agencies have cut Puerto Rico’s debt to junk status because of significant default risks.

Puerto Rico has an onerous debt burden that faces headwinds of a weak economy and significant unfunded pension obligations, said Morningstar analyst Beth Foos. She declined to comment specifically on the UBS funds.

Analysts said investors continue to buy Puerto Rico bonds, drawn to tax advantages and attractive yields as high as 7.75 percent, even though there is a significant risk that the U.S. territory will not be able to repay its bond obligations.

TIME animals

Behind the Picture: Hansel Mieth’s Wet, Unhappy Monkey

Photographer Hansel Mieth's own attitude toward her famous 1938 portrait of a soaking wet rhesus monkey was, to put it bluntly, conflicted

It is, without question, one of the most famous, most frequently reproduced animal photographs ever made. But photographer Hansel Mieth’s own attitude toward her 1938 portrait of a sodden rhesus monkey hunched in the water off of Puerto Rico was, to put it bluntly, conflicted. In fact, the German-born Mieth (1909–1998) memorably called the creature in the picture “the monkey on my back.”

As Mieth explained in a 1993 interview with John Loengard, published in his book, LIFE Photographers: What They Saw, she made the photograph while covering a Harvard Medical School primate study on tiny Cayo Santiago, off the east coast of Puerto Rico:

One afternoon all the doctors were away [Mieth told Loengard], and a little kid came running to me and said, “A monkey’s in the water.”

I came down, and that monkey was really going hell-bent for something. . . . I threw my Rolleiflex on my back and swam out. Finally, I was facing the monkey. I don’t think he liked me, but he sat on that coral reef, and I took about a dozen shots.

When she got back to New York, Mieth learned that the joke around the LIFE offices was that she’d produced a striking portrait of Henry Luce, the founder and publisher of TIME, LIFE, Fortune and other magazines: evidently, some of her colleagues felt that the rhesus in the water looked like their boss. When asked by Loengard, six decades later, if she felt the portrait did resemble Luce, Mieth was diplomatic.

I didn’t see Luce that much. He had lots of other things to do rather than talk with photographers. . . . But I suppose it does, in a way. It all depends on what kind of mood you are in. To me it looks like the monkey’s depicting the state of the world at the time. It was dark and somber and angry. There were a lot of dark clouds swirling around. I heard from many people that they were scared when they looked at it.

Today, the monkey on Mieth’s back still commands our gaze, inviting us—perhaps challenging us—to project our own fears, anxieties and speculations on to a picture, and a primate, that never gets old.

FINAL NOTE: While a half-dozen lesser pictures from the assignment in Puerto Rico were published in the Jan. 2, 1939, issue of LIFE, Mieth’s now-iconic monkey photo appeared a few weeks later, in the Jan. 16 issue—accompanied by the caption, “A misogynist seeks solitude in the Caribbean off Puerto Rico.”

According to the magazine, a primatologist explained that “the chatter of innumerable female monkeys had impelled this neurotic bachelor to seek escape from the din” by fleeing the jungle and making his way into the waves.

Seventy-five years later, that particular theory about how and why the rhesus was out there in the water still sounds as reasonable as any other.

Ben Cosgrove is the Editor of LIFE.com

TIME Puerto Rico

The Next Financial Catastrophe You Haven’t Heard About Yet: Puerto Rico

On Tuesday, the island sold $3.5 billion in new debt. But the crisis still poses a danger to everyday U.S. investors

Until recently, Puerto Rico was an investors’ tax heaven, renowned for its sandy beaches and killer rum. But the island is in dire financial condition and thousands of U.S. mom-and-pop investors may lose a big part of their savings if the small territory goes bankrupt.

It all started with an over-borrowing spree that lasted for decades. It ended with an island of fewer than four million residents accumulating $70 billion dollars in debt. That is a debt per capita of around $10,600 – or 10 times the median for U.S. states, according to the ratings agency Standard and Poor’s.

Puerto Rico’s over-borrowing was facilitated by an eager group of U.S. investors. U.S. mutual funds were more than willing to buy Puerto Rico bonds, because the island has a special financial advantage: its bonds are triple tax-exempt, which means that bondholders do not pay federal, state and local taxes for their coupon income (i.e. interest) from the bonds.

This created a large buyers base for Puerto Rico’s bonds, which encouraged the commonwealth to keep issuing debt. As a result, today around 70 percent of U.S. mutual funds own Puerto Rico securities, according to Morningstar, an investment research firm that specializes in data on mutual funds and similar investment offerings.

But Puerto Rico did not handle prudently enough this easy cash flow that was coming in. “For years, Puerto Rico practiced deficit financing, which essentially means taking out long-term debt to cover short-term financial needs; this was created by too much spending relative to revenues,” says municipal bond market expert Chris Mier, chief strategist at Loop Capital, an investment bank and advisory firm.

“This is unsustainable from an economic policy point of view in the long run, but since the ratings remained above investment grade, the buyers of the debt did not worry excessively,” says Mier.

The spark that lit the fuse came in 1996, when President Clinton repealed legislation that gave tax incentives for U.S. companies to locate facilities in Puerto Rico. The island’s economy began to sputter, and after the great recession, the decline in the island’s governmental finances continued.

At at time when the island is experiencing steady population loss and very low productivity, the unsustainability of unbalanced budgets and rapidly growing debt became increasingly evident.

Then the downgrades came: in the past several years, ratings agencies gradually downgraded Puerto Rico’s debt notch by notch. And the island’s government continued to promise investors that it would pass a balanced budget – something that has not occurred in over a decade.

To make things worse, a “brain drain” is occurring, as young qualified professionals are fleeing an unemployment rate of 15.4%, compared to the 6.6% federal unemployment rate, according to the U.S. Bureau of Labor Statistics. The fact that Puerto Ricans are U.S. citizens makes migration much easier and appealing, says Puerto Rican consultant Heidie Calero, president of Calero Consulting Group.

Currently, Puerto Rico’s population is 3.7 million on the island, versus 4.9 million Puerto Ricans living on the U.S. mainland. The U.S. Census Bureau projects that the island’s population will drop to 2.3 million in 2050.

“Around 51 percent of the island’s population is on welfare. How do you make them participate in the economy?” asks Calero. The size of the island’s “underground economy” was recently estimated at approximately $20 billion; and that is just an approximation since nobody really knows how much revenue goes unaccounted for, says Calero.

In February 2014, all three major ratings agencies downgraded Puerto Rico’s debt to below investment grade, widely referred to as ”junk” status in bond market circles. This indicates a greater risk of possible default or a debt restructuring. For U.S. investors, this means that the crisis in Puerto Rico will have a severe impact, not only on Wall Street but also on thousands of mom-and-pop investors.

The decline in market value of Puerto Rico bonds has reduced the value of investors’ holdings by at times as much as 35%, says Mier. But Mier cautions that there are many possible scenarios, including favorable ones where Puerto Rico succeeds in resolving its budget and debt problems and returns to investment grade ratings.

But to do that, the government needs to balance two seemingly conflicting goals: economic growth and fiscal austerity, says economist Carlos Soto-Santoni, president of Nexos Económicos, a Puerto Rico-based consulting firm, and deputy advisor for former Governor Rafael Hernández Colón’s administration.

In 2013 alone, the government passed $ 1.36 billion in new taxes. While this increases the government’s revenue, it makes doing business on the island more onerous – which in turn further impedes economic growth, says Soto-Santoni.

Solving the economic puzzle will determine whether Puerto Rico will be for the U.S. what Greece was for the European Union.

Ellie Ismailidou is a reporter for Debtwire Municipals

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