10 Governments That Went Bankrupt. National bankruptcy is a popular discussion topic of late. In light of the global financial meltdown and the runaway deficit spending of the United States in particular, observers are predicting that national bankruptcy is entirely possible. Harvard MBA John T. Reed, for instance, opines that our children and grandchildren will likely “live in a world where America’s credit cards have been cut up because our huge debt was renounced.”
Those who insist this could not happen would do well to look at history, and all of the national governments that have gone bankrupt over the years. Today we’ll take a look back at 10 of the best-known examples. Argentina Image Source National bankruptcy skeptics like to claim that while countries went bankrupt hundreds of years ago, such catastrophe is out of the question in our modern, inter-dependent world. Iceland Image Source Germany Image Source Germany has the dubious distinction of having gone bankrupt not once, but twice in recent memory. Great Britain. What are the consequences of sovereign defaults | Paul Ormerod. Potential defaults in the Euro zone have been in the news again. In Portugal, the ruling coalition parties and the main opposition Socialists have been unable to agree on a European Union-led bailout plan after days of talks. Yields on the country’s 10 year bonds have approached 7 per cent, compared to the 1.5 per cent in Germany. There has been some improvement this week on the news that an early general election has been avoided, but yields still remain over 6 per cent.
Even more dramatically, the city of Detroit has become the largest American city to file for bankruptcy. Just as in the case of the Mediterranean countries, the public sector workers had been provided with much too generous wage and pension levels for much too long. But does it matter? International finance theory predicts that sovereign defaults lead to higher subsequent borrowing costs. So why not just do it and default?
Can sovereign defaults tank the global economy? Investors are running for the hills these days, shaken to the core by fears that sovereign defaults will roil global markets and derail the shaky recovery. They have a lot to worry about. European leaders will gather for an emergency meeting on Thursday to try to finally hammer out an agreement on a second bailout of tottering Greece – a package very likely to include some sort of de facto default. Contagion threatens to drag other euro zone economies into a similar state. Yields on Spanish and Italian bonds reached fresh euro-era highs on Monday. Still, are the fears justified? The main way a sovereign default could hurt global growth is through its impact on the financial sector.
In the best of cases, improving competitiveness and returning to fiscal health in some of these (European) countries will be a long and painful process. At the same time, the euro debt crisis has been simmering for 18 months, and these fears have remained just that – fears. Plan exposé. Dessine-moi l'éco. Upload Site officiel Subscription preferences Loading...
Working... Dessine-moi l'éco 3:09 Dessine-moi l'éco : Conséquences d'une mauvaise nouvelle sur notre système économique 26,095 views 2 years ago 3:19 Dessine-moi l'éco : Comment un Etat peut-il faire faillite ? Sign in to add this to Watch Later Add to. What Happens When a Country Declares Bankruptcy? To avert bankruptcy or to cope with its effects, insolvent governments often look abroad for a bailout. Nations in the most dire straits seek emergency loans from the International Monetary Fund (IMF). Recipients of IMF assistance have included Hungary and the Ukraine. IMF assistance, however, comes with strings attached. In exchange for IMF help, "Spiegel" reported, the Ukraine was forced to freeze social spending, privatize some government services, and increase natural gas prices. Faut-il organiser la faillite des Etats de la zone euro ?
Et si, demain, la Grèce ou l’Irlande jetaient l’éponge et refusaient de rembourser la totalité d’une dette devenue insupportable ? Une hypothèse que l’on croyait jusque-là réservée aux économies émergentes, comme le Mexique ou l’Argentine. Pudique. Mais les titanesques plans de sauvetage européens dus à l’explosion des dettes publiques (20 à 30 points de PIB de plus en deux ans dans la zone euro, surtout à cause de la crise) et aux attaques des marchés contre les dettes souveraines ont remis au goût du jour la «restructuration des dettes publiques», terme pudique pour dire que l’on ne remboursera que partiellement. Primes. Puisqu’il existe désormais une solidarité financière de fait entre les pays de la zone euro, Berlin a exigé que les marchés soient mis à contribution : «Il n’y a aucune entreprise qui espère transférer ses risques à 100 % au contribuable si les choses tournent mal», explique ainsi la chancelière allemande, Angela Merkel.
Dessin Rémi Malingrey. CRISE • "Il faut laisser les Etats et les banques faire faillite" Le gourou de la finance zurichoise Marc Faber estime qu'une faillite des banques et des Etats ne signifierait pas la fin du monde mais permettrait au contraire de repartir sur de bonnes bases. Le Temps : Les marchés ont dégringolé. Comment analysez-vous la situation ? Marc Faber : Ils sont très survendus à court terme. Je m'attends à un rebond, puis à un nouveau ralentissement dès octobre ou novembre. Le S&P atteindra environ 1 100 points. Le dollar ne cesse de dégringoler. Oui, j'ai toujours pensé que la valeur terminale du dollar était zéro, car le gouvernement, le Trésor et la Réserve fédérale n'ont aucun intérêt à maintenir un dollar fort.
Croyez-vous aussi à la fin de l'euro ? Je n'en ai aucune idée, car il s'agit d'une décision politique. Aux côtés de la Grèce figurent le Portugal, l'Irlande, l'Espagne et l'Italie. Oui, même si cette solution est douloureuse. Ces nouvelles règles sont bonnes, mais le timing est mauvais. Investissez-vous en Chine ? Peut-être. Faillite des Etats (anticipation et gestion) Lors des discussions relatives à la mise en place du mécanisme européen de stabilité (MES) les mots « dictature », « stalinisme néo-libéral ( ?!)
Et autres noms d’oiseau ont failli étre utilisés avec le dessein très clair de jeter ledit mécanisme aux orties. On a décrit le MES et les généralités sur les faillites des Etats dans deux entrées. Un des aspects très controversé de sa création est son lien avec le fameux traité de la « règle d’or » ou traité sur la stabilité, la coordination et la gouvernance de l'Union (TSCG). En effet, parmi les missions attribuées au MES (qui fonctionnera sous la houlette de la BCE), sont celles qui consisteraient à faire des enquêtes, études et toutes recherches sur les grands équilibres financiers, bancaires et monétaires des pays adhérents aux traités qui instituent une forme de solidarité européenne (Zone euro). Les traités européens partagent avec la loi française un goût immodéré pour la sanction de type pénal ! La faillite des Etats n’existe pas…. The Effects of a Country's Bankruptcy.
Bankruptcies - Countries - List. The Ghost of Argentina: What Happens when Countries Go Bankrupt? No, Alexander Lukyanchenko told reporters at a hastily convened press conference last Tuesday, there is "no reason whatsoever to spread panic. " Anyone who was caught trying to throw people out into the street, he warned, would have the authorities to deal with. Lukyanchenko is the mayor of Donetsk, a city in eastern Ukraine with a population of a little more than one million. For generations, the residents of Donetsk have earned a living in the surrounding coalmines and steel mills, a rather profitable industry in the recent past. Donetsksta, a local steel producer, earned €1.3 billion ($1.65 billion) in revenues last year. But last Tuesday the mayor, returning from a meeting with business leaders, had bad news: two-thousand metalworkers would have to be furloughed. Under these conditions, how could panic not be rampant in Donetsk, the capital of Ukraine's industrial heartland?
It is a development that has investors and speculators alike holding their breath. The Ghost of Buenos Aires. When Countries Go Bankrupt. In December 2006, Britain made its final payment of $84 million on a $4.34 billion loan from the U.S. that was made all the way back in 1945. Germany wasn’t the only country to go bankrupt after WWII. This money allowed Britain to stave off its total collapse after devoting almost all its resources to the war for over half a decade.
To put this in perspective, $4.34 billion in 1945 is roughly equivalent to $140 billion today, an amount that was double the size of Britain’s economy at the time. Had the U.S. not made this loan, the British economy would have been thrown into a tailspin, causing huge implications, not only to the UK, but also to countries around the world. Today we see a number of nations on the verge of bankruptcy. To be sure, many countries have gone bankrupt in the past, and many more will default in the future. What happens when a nation goes bankrupt? When a country goes bust, the pain is felt on very deep levels. This is what happened in Argentina in 1999. Final Thoughts. State Bankruptcy Option Is Sought, Quietly.