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What happens when a country goes bust?



G

Gwylan

Well-known member
Jul 5, 2003
31,841
Uffern
sten_super said:
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.
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If they can't borrow money wouldn't that be any admittance that it couldn't pay its debts.

And if the generals step in because of civil unrest, I'll go back to the question I asked earlier - can a country that's not a democracy be part of the EU?
 
















Pavilionaire

Pavilionaire

Well-known member
Jul 7, 2003
31,278
I think the EU should give them an ultimatum, delivered tv-interrupting "Blofeld-style" by the German Chancellor.

"If you vant to be bailed out you must give us an island! You have 24 hours, schnell!"

The Greeks could then vote out which island was for the chop. I think a reasonable outcome would be for them to give us Cyprus, then we'll call it quits. If they default again, it's Rhodes...
 


C

cheeseroll

New member
Jul 5, 2003
1,002
Fragrant Harbour
Kick them out of Europe, they'd have to revert to the Drachma which would be worth pennies and we can go on holiday there on the cheap and they can slowly recover! Sorted.
 








G

Gwylan

Well-known member
Jul 5, 2003
31,841
Uffern
Pavilionaire said:
I think the EU should give them an ultimatum, delivered tv-interrupting "Blofeld-style" by the German Chancellor.

"If you vant to be bailed out you must give us an island! You have 24 hours, schnell!"

The Greeks could then vote out which island was for the chop. I think a reasonable outcome would be for them to give us Cyprus, then we'll call it quits. If they default again, it's Rhodes...
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IIRC this was seriously suggested by a German newspaper.

OK, it was Das Bild, which makes the Sun look heavyweight, but still ...
 












Papa Lazarou

Papa Lazarou

Living in a De Zerbi wonderland
Jul 7, 2003
19,370
Worthing
Pavilionaire said:
The Greeks could then vote out which island was for the chop. I think a reasonable outcome would be for them to give us Cyprus, then we'll call it quits. If they default again, it's Rhodes...
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I bit tricky, as the last time I checked they only 'owned' half of that particular island...
 




El Presidente

El Presidente

The ONLY Gay in Brighton
Helpful Moderator
Jul 5, 2003
40,018
Pattknull med Haksprut
When Russia went bust in 1997, it meant that lenders had to write off their debts. This caused a huge issue on Wall Street, and led to the fall of Long Term Capital Management (suggest you read the book 'When Genius Failed' which goes into the details).

Countries have two choices, they can initiate huge public sector cuts, OR they can print money to pay their employees, which causes a rapid rise in inflation. In Russia the government did a combination of the above, and state employees did not receive their salaries (or received bartered goods in lieu of them) whilst inflation peaked 2,520%, whilst male life expectancy fell from 62 to 57 between 1990-96 as no one could afford medical supplies.

It was only the increase in the world price of oil that rescued the Russian economy, combined with the Clinton administration fearing civil war in Russia, and therefore underwriting a huge loan from the IMF.
 


G

Gwylan

Well-known member
Jul 5, 2003
31,841
Uffern
El Presidente said:
When Russia went bust in 1997, it meant that lenders had to write off their debts. This caused a huge issue on Wall Street, and led to the fall of Long Term Capital Management (suggest you read the book 'When Genius Failed' which goes into the details).

Countries have two choices, they can initiate huge public sector cuts, OR they can print money to pay their employees, which causes a rapid rise in inflation. In Russia the government did a combination of the above, and state employees did not receive their salaries (or received bartered goods in lieu of them) whilst inflation peaked 2,520%, whilst male life expectancy fell from 62 to 57 between 1990-96 as no one could afford medical supplies.

It was only the increase in the world price of oil that rescued the Russian economy, combined with the Clinton administration fearing civil war in Russia, and therefore underwriting a huge loan from the IMF.
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Wasn't part of the problem that various 'entrepreneurs' had seized a lot of state assets? And so some of the country's wealth had disappeared into their pockets? (and the rest had been spent on vodka by Yeltsin).

As for printing more money - does Greece have this option? Surely the Euro is handled by the ECB and they're not going to do something so inflationary.
 






El Presidente

El Presidente

The ONLY Gay in Brighton
Helpful Moderator
Jul 5, 2003
40,018
Pattknull med Haksprut
Gwylan said:
Wasn't part of the problem that various 'entrepreneurs' had seized a lot of state assets? And so some of the country's wealth had disappeared into their pockets? (and the rest had been spent on vodka by Yeltsin).

As for printing more money - does Greece have this option? Surely the Euro is handled by the ECB and they're not going to do something so inflationary.
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I don't think 'seized' is the right word. There was a power and control vacuum, and the state sold them off ridiculously cheap, a bit like some privatisations here, but on a far grander scale.
 


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