What happens when a country goes bust?

[Gwylan]

One of the accountants/economists/city people really.

With all this talk about Greece not being able to pay its debts and having to be bailed out - what happens if it's not bailed out and can't pay its debts.

It can't be repossessed and have its goods sold. Can it have a country equivalent of a bankruptcy and reschedule its debts - paying its creditors 10c in the Euro or something? Why can't it just say "Can't pay, won't pay"? What can the lenders do?

I remember Iceland was faced with a similar situation a couple of years ago but for all the talk of going bust, is still there. Interestingly, while people are blaming Greece's downfall on the Euro, Iceland wants to protect itself by joining the Euro.

I'm not trying to score any points, I'm genuinely interested as to what could happen.

 

[Badger]

I think they get deducted 10 points

 

[Deleted User X18H]

You vote the Tories in and quick!

 

[Barrel of Fun]

European countries that go bust have their country and residents banned from entering and travelling to Eurovision.

Didn't Argentina become bankrupt in the early part of this century?

Argentine economic crisis (1999–2002) - Wikipedia, the free encyclopedia

 

[Lord Bracknell]

From Catch 22 by Joseph Heller:-


"America," he said, "will lose the war. And Italy will win it."

"America is the strongest and most prosperous nation on earth," Nately informed him with lofty fervor and dignity. "And the American fighting man is second to none."

"Exactly," agreed the old man pleasantly, with a hint of taunting amusement. "Italy, on the other hand, is one of the least prosperous nations on earth. And the Italian fighting man is probably second to all. And that's exactly why my country is doing so well in this war while your country is doing so poorly."

"I'm sorry I laughed at you. But Italy was occupied by the Germans and is now being occupied by us. You don't call that doing very well, do you?"

"But of course I do," exclaimed the old man cheerfully. "The Germans are being driven out, and we're still here. In a few years, you will be gone, too, and we will still be here. You see, Italy is really a very poor and weak country, and that's what makes us so strong. Italian soldiers are not dying anymore. But American and German soldiers are. I call that doing extremely well. Yes, I'm quite certain Italy will survive this war and still be in existence long after your own country has been destroyed."

"America is not going to be destroyed!" he shouted passionately.

"Never?" prodded the old man softly.

"Well..." Nately faltered.

"Rome was destroyed, Greece was destroyed, Persia was destroyed, Spain was destroyed. All great countries are destroyed. Why not yours? How much longer do you really think your own country will last? Forever? Keep in mind that the earth itself is destined to be destroyed by the sun in twenty-five million years or so."

"I don't believe anything you tell me," Nately replied... "The only thing I do believe is that America is going to win the war."

"You put so much stock in winning wars. The real trick lies in losing wars, in knowing which wars can be lost. Italy has been losing wars for centuries, and just see how splendidly we've done nonetheless. France wins wars and is in a continual state of crisis. Germany loses and prospers. Look at our recent history. Italy won a war in Ethiopia and promptly stumbled into serious trouble. Victory gave us such insane delusions of grandeur that we helped start a world war we hadn't a chance of winning. But now that we are losing again, everything has taken a turn for the better and we will certainly come out on top again if we succeed in being defeated."

Nately gaped at him in undisguised befuddlement. "Now I really don't understand what you're saying. You talk like a madman."

"But I live like a sane one. I was a fascist when Mussolini was on top, and I am anti-fascist now that he has been deposed. I was fanatically pro-German when the Germans were here to protect us against the Americans, and now that the Americans are here to protect us against the Germans I am fanatically pro-American...When the Germans marched into the city, I danced in the streets like a ballerina and shouted `Heil Hitler!'... When the Germans left the city, I rushed out to welcome the Americans with a bottle of excellent brandy and a basket of flowers. The brandy was for myself, of course, and the flowers were to sprinkle upon our liberators... ".

"There is nothing so absurd about risking your life for your country," Nately declared.

"Isn't there?" asked the old man. "What is a country? A country is a piece of land surrounded on all sides by boundaries, usually unnatural. Englishmen are dying for England. Americans are dying for America. Germans are dying for Germany. Russians are dying for Russia. There are now fifty or sixty countries fighting in this war. Sure so many countries can't all be worth dying for."

"Anything worth living for," Nately said, "is worth dying for."

"And anything worth dying for," answered the sacrilegious old man, "is certainly worth living for. Why don't you use some sense and try to be more like me? You might live to be a hundred and seven too."

"Because it's better to die on one's feet than live on one's knees. I guess you're heard that saying before."

"Yes I certainly have," mused the treacherous old man, smiling again. "But I'm afraid you have it backward. It is better to live on one's feet than die on one's knees. That is the way the saying goes.

"Are you sure?" Nately asked with sober confusion. "It seems to make more sense my way."

"No, it makes more sense my way..."

 

[lichfield seagulls]

They'll all move over here and then go on the dole

 

[bullshit detector]

Well, if the Greeks I know get their way - all the rich scum get jailed, workers' and soldiers' councils take over, the anger at the way these bastards rip us off and then laugh spreads all over the world and we do a better job of it than last time.

 

[BLOCK F]

From Catch 22 by Joseph Heller:-


"America," he said, "will lose the war. And Italy will win it."

"America is the strongest and most prosperous nation on earth," Nately informed him with lofty fervor and dignity. "And the American fighting man is second to none."

"Exactly," agreed the old man pleasantly, with a hint of taunting amusement. "Italy, on the other hand, is one of the least prosperous nations on earth. And the Italian fighting man is probably second to all. And that's exactly why my country is doing so well in this war while your country is doing so poorly."

"I'm sorry I laughed at you. But Italy was occupied by the Germans and is now being occupied by us. You don't call that doing very well, do you?"

"But of course I do," exclaimed the old man cheerfully. "The Germans are being driven out, and we're still here. In a few years, you will be gone, too, and we will still be here. You see, Italy is really a very poor and weak country, and that's what makes us so strong. Italian soldiers are not dying anymore. But American and German soldiers are. I call that doing extremely well. Yes, I'm quite certain Italy will survive this war and still be in existence long after your own country has been destroyed."

"America is not going to be destroyed!" he shouted passionately.

"Never?" prodded the old man softly.

"Well..." Nately faltered.

"Rome was destroyed, Greece was destroyed, Persia was destroyed, Spain was destroyed. All great countries are destroyed. Why not yours? How much longer do you really think your own country will last? Forever? Keep in mind that the earth itself is destined to be destroyed by the sun in twenty-five million years or so."

"I don't believe anything you tell me," Nately replied... "The only thing I do believe is that America is going to win the war."

"You put so much stock in winning wars. The real trick lies in losing wars, in knowing which wars can be lost. Italy has been losing wars for centuries, and just see how splendidly we've done nonetheless. France wins wars and is in a continual state of crisis. Germany loses and prospers. Look at our recent history. Italy won a war in Ethiopia and promptly stumbled into serious trouble. Victory gave us such insane delusions of grandeur that we helped start a world war we hadn't a chance of winning. But now that we are losing again, everything has taken a turn for the better and we will certainly come out on top again if we succeed in being defeated."

Nately gaped at him in undisguised befuddlement. "Now I really don't understand what you're saying. You talk like a madman."

"But I live like a sane one. I was a fascist when Mussolini was on top, and I am anti-fascist now that he has been deposed. I was fanatically pro-German when the Germans were here to protect us against the Americans, and now that the Americans are here to protect us against the Germans I am fanatically pro-American...When the Germans marched into the city, I danced in the streets like a ballerina and shouted `Heil Hitler!'... When the Germans left the city, I rushed out to welcome the Americans with a bottle of excellent brandy and a basket of flowers. The brandy was for myself, of course, and the flowers were to sprinkle upon our liberators... ".

"There is nothing so absurd about risking your life for your country," Nately declared.

"Isn't there?" asked the old man. "What is a country? A country is a piece of land surrounded on all sides by boundaries, usually unnatural. Englishmen are dying for England. Americans are dying for America. Germans are dying for Germany. Russians are dying for Russia. There are now fifty or sixty countries fighting in this war. Sure so many countries can't all be worth dying for."

"Anything worth living for," Nately said, "is worth dying for."

"And anything worth dying for," answered the sacrilegious old man, "is certainly worth living for. Why don't you use some sense and try to be more like me? You might live to be a hundred and seven too."

"Because it's better to die on one's feet than live on one's knees. I guess you're heard that saying before."

"Yes I certainly have," mused the treacherous old man, smiling again. "But I'm afraid you have it backward. It is better to live on one's feet than die on one's knees. That is the way the saying goes.

"Are you sure?" Nately asked with sober confusion. "It seems to make more sense my way."

"No, it makes more sense my way..."

Excellent!!

 

[Gwylan]

Well, if the Greeks I know get their way - all the rich scum get jailed, workers' and soldiers' councils take over,

The military did run Greece for some time in the late 60s and early 70s.

Can a country that's not a democracy be part of the EU and the Eurozone?

 

[pork pie]

The receivers go in and sell everything back to the Government for a next to nothing?

 

[deletebeepbeepbeep]

Now I want to read Catch 22 all over again.

 

[Gwylan]

Hmm.... as I suspected. 150 views and no-one has any idea what actually happens when a country goes bust - despite the way that the phrase is lavishly used.

 

[Danny-Boy]

One of the accountants/economists/city people really.

With all this talk about Greece not being able to pay its debts and having to be bailed out - what happens if it's not bailed out and can't pay its debts.

It can't be repossessed and have its goods sold. Can it have a country equivalent of a bankruptcy and reschedule its debts - paying its creditors 10c in the Euro or something? Why can't it just say "Can't pay, won't pay"? What can the lenders do?

I remember Iceland was faced with a similar situation a couple of years ago but for all the talk of going bust, is still there. Interestingly, while people are blaming Greece's downfall on the Euro, Iceland wants to protect itself by joining the Euro.

I'm not trying to score any points, I'm genuinely interested as to what could happen.

Read an article in "The Times" today, very informed.

 

[Don Quixote]

From Catch 22 by Joseph Heller:-


"America," he said, "will lose the war. And Italy will win it."

"America is the strongest and most prosperous nation on earth," Nately informed him with lofty fervor and dignity. "And the American fighting man is second to none."

"Exactly," agreed the old man pleasantly, with a hint of taunting amusement. "Italy, on the other hand, is one of the least prosperous nations on earth. And the Italian fighting man is probably second to all. And that's exactly why my country is doing so well in this war while your country is doing so poorly."

"I'm sorry I laughed at you. But Italy was occupied by the Germans and is now being occupied by us. You don't call that doing very well, do you?"

"But of course I do," exclaimed the old man cheerfully. "The Germans are being driven out, and we're still here. In a few years, you will be gone, too, and we will still be here. You see, Italy is really a very poor and weak country, and that's what makes us so strong. Italian soldiers are not dying anymore. But American and German soldiers are. I call that doing extremely well. Yes, I'm quite certain Italy will survive this war and still be in existence long after your own country has been destroyed."

"America is not going to be destroyed!" he shouted passionately.

"Never?" prodded the old man softly.

"Well..." Nately faltered.

"Rome was destroyed, Greece was destroyed, Persia was destroyed, Spain was destroyed. All great countries are destroyed. Why not yours? How much longer do you really think your own country will last? Forever? Keep in mind that the earth itself is destined to be destroyed by the sun in twenty-five million years or so."

"I don't believe anything you tell me," Nately replied... "The only thing I do believe is that America is going to win the war."

"You put so much stock in winning wars. The real trick lies in losing wars, in knowing which wars can be lost. Italy has been losing wars for centuries, and just see how splendidly we've done nonetheless. France wins wars and is in a continual state of crisis. Germany loses and prospers. Look at our recent history. Italy won a war in Ethiopia and promptly stumbled into serious trouble. Victory gave us such insane delusions of grandeur that we helped start a world war we hadn't a chance of winning. But now that we are losing again, everything has taken a turn for the better and we will certainly come out on top again if we succeed in being defeated."

Nately gaped at him in undisguised befuddlement. "Now I really don't understand what you're saying. You talk like a madman."

"But I live like a sane one. I was a fascist when Mussolini was on top, and I am anti-fascist now that he has been deposed. I was fanatically pro-German when the Germans were here to protect us against the Americans, and now that the Americans are here to protect us against the Germans I am fanatically pro-American...When the Germans marched into the city, I danced in the streets like a ballerina and shouted `Heil Hitler!'... When the Germans left the city, I rushed out to welcome the Americans with a bottle of excellent brandy and a basket of flowers. The brandy was for myself, of course, and the flowers were to sprinkle upon our liberators... ".

"There is nothing so absurd about risking your life for your country," Nately declared.

"Isn't there?" asked the old man. "What is a country? A country is a piece of land surrounded on all sides by boundaries, usually unnatural. Englishmen are dying for England. Americans are dying for America. Germans are dying for Germany. Russians are dying for Russia. There are now fifty or sixty countries fighting in this war. Sure so many countries can't all be worth dying for."

"Anything worth living for," Nately said, "is worth dying for."

"And anything worth dying for," answered the sacrilegious old man, "is certainly worth living for. Why don't you use some sense and try to be more like me? You might live to be a hundred and seven too."

"Because it's better to die on one's feet than live on one's knees. I guess you're heard that saying before."

"Yes I certainly have," mused the treacherous old man, smiling again. "But I'm afraid you have it backward. It is better to live on one's feet than die on one's knees. That is the way the saying goes.

"Are you sure?" Nately asked with sober confusion. "It seems to make more sense my way."

"No, it makes more sense my way..."

The greatest 20th Century novel. I used that section for my English A level coursework.

 

[Danny-Boy]

From Catch 22 by Joseph Heller:-


"America," he said, "will lose the war. And Italy will win it."

"America is the strongest and most prosperous nation on earth," Nately informed him with lofty fervor and dignity. "And the American fighting man is second to none."

"Exactly," agreed the old man pleasantly, with a hint of taunting amusement. "Italy, on the other hand, is one of the least prosperous nations on earth. And the Italian fighting man is probably second to all. And that's exactly why my country is doing so well in this war while your country is doing so poorly."

"I'm sorry I laughed at you. But Italy was occupied by the Germans and is now being occupied by us. You don't call that doing very well, do you?"

"But of course I do," exclaimed the old man cheerfully. "The Germans are being driven out, and we're still here. In a few years, you will be gone, too, and we will still be here. You see, Italy is really a very poor and weak country, and that's what makes us so strong. Italian soldiers are not dying anymore. But American and German soldiers are. I call that doing extremely well. Yes, I'm quite certain Italy will survive this war and still be in existence long after your own country has been destroyed."

"America is not going to be destroyed!" he shouted passionately.

"Never?" prodded the old man softly.

"Well..." Nately faltered.

"Rome was destroyed, Greece was destroyed, Persia was destroyed, Spain was destroyed. All great countries are destroyed. Why not yours? How much longer do you really think your own country will last? Forever? Keep in mind that the earth itself is destined to be destroyed by the sun in twenty-five million years or so."

"I don't believe anything you tell me," Nately replied... "The only thing I do believe is that America is going to win the war."

"You put so much stock in winning wars. The real trick lies in losing wars, in knowing which wars can be lost. Italy has been losing wars for centuries, and just see how splendidly we've done nonetheless. France wins wars and is in a continual state of crisis. Germany loses and prospers. Look at our recent history. Italy won a war in Ethiopia and promptly stumbled into serious trouble. Victory gave us such insane delusions of grandeur that we helped start a world war we hadn't a chance of winning. But now that we are losing again, everything has taken a turn for the better and we will certainly come out on top again if we succeed in being defeated."

Nately gaped at him in undisguised befuddlement. "Now I really don't understand what you're saying. You talk like a madman."

"But I live like a sane one. I was a fascist when Mussolini was on top, and I am anti-fascist now that he has been deposed. I was fanatically pro-German when the Germans were here to protect us against the Americans, and now that the Americans are here to protect us against the Germans I am fanatically pro-American...When the Germans marched into the city, I danced in the streets like a ballerina and shouted `Heil Hitler!'... When the Germans left the city, I rushed out to welcome the Americans with a bottle of excellent brandy and a basket of flowers. The brandy was for myself, of course, and the flowers were to sprinkle upon our liberators... ".

"There is nothing so absurd about risking your life for your country," Nately declared.

"Isn't there?" asked the old man. "What is a country? A country is a piece of land surrounded on all sides by boundaries, usually unnatural. Englishmen are dying for England. Americans are dying for America. Germans are dying for Germany. Russians are dying for Russia. There are now fifty or sixty countries fighting in this war. Sure so many countries can't all be worth dying for."

"Anything worth living for," Nately said, "is worth dying for."

"And anything worth dying for," answered the sacrilegious old man, "is certainly worth living for. Why don't you use some sense and try to be more like me? You might live to be a hundred and seven too."

"Because it's better to die on one's feet than live on one's knees. I guess you're heard that saying before."

"Yes I certainly have," mused the treacherous old man, smiling again. "But I'm afraid you have it backward. It is better to live on one's feet than die on one's knees. That is the way the saying goes.

"Are you sure?" Nately asked with sober confusion. "It seems to make more sense my way."

"No, it makes more sense my way..."

The film made more sense to me

 

[sten_super]

Hmm.... as I suspected. 150 views and no-one has any idea what actually happens when a country goes bust - despite the way that the phrase is lavishly used.

I think everyone is a bit unsure. In the past countries have been in control of their own money supply, and have been able to print money to pay off debts; it has completely screwed the economy, but ultimately debts have been paid. Greece does not have that option.

A true default would lead to creditors being given a percentage of whatever they are owed, in a similar way to a CVA for a firm in this country. That's unlikely, however. What is much more likely is a 'restructuring' of the debt, which is a backdoor default. The original terms of the loans would be ripped up, and creditors would receive most (but probably not all) of the debt that they are owed, but over a much longer period (i.e. the interest rates that have shot up so much in the past few days have been on two-year bonds, but after a restructure it is likely that these would be paid off over as much as twenty years instead).

 

[Huple]

Hey guys..............anyone seen my cat ?

 

[Gwylan]

I think everyone is a bit unsure. In the past countries have been in control of their own money supply, and have been able to print money to pay off debts; it has completely screwed the economy, but ultimately debts have been paid. Greece does not have that option.

A true default would lead to creditors being given a percentage of whatever they are owed, in a similar way to a CVA for a firm in this country. That's unlikely, however. What is much more likely is a 'restructuring' of the debt, which is a backdoor default. The original terms of the loans would be ripped up, and creditors would receive most (but probably not all) of the debt that they are owed, but over a much longer period (i.e. the interest rates that have shot up so much in the past few days have been on two-year bonds, but after a restructure it is likely that these would be paid off over as much as twenty years instead).

I suspected that no-one exactly was sure - that's why I was interested to hear views.

Why is no attempt being made to reschedule these debts now, rather than calling for more loans from the IMF or Germany. The downside for Greece, as I see it, is that it lumbers the country with debt for decades - but we do it with PFI: why not lumber a future government with debt? There's a downside for the lenders of course, but a rescheduled debt is better than a complete default.

 

[Dick Knights Mumm]

I suppose it would resolve any immigration issues.

 

[sten_super]

I suspected that no-one exactly was sure - that's why I was interested to hear views.

Why is no attempt being made to reschedule these debts now, rather than calling for more loans from the IMF or Germany. The downside for Greece, as I see it, is that it lumbers the country with debt for decades - but we do it with PFI: why not lumber a future government with debt? There's a downside for the lenders of course, but a rescheduled debt is better than a complete default.

Because a reschedule would be an admittance that Greece cannot pay its debts on current terms, and is effectively insolvent. Best case scenario is that Greece cannot borrow ANY money from any bank anywhere in the world and the country is forced into a drastic adjustment in spending, leading to mass unemployment and civil unrest. Worst case scenario is that investors lose all faith in the ratings system and the banking system that it props up, and we enter another, longer, global recession/depression.