What Does A Sovereign Default Look Like?

[Selling up]

Hi all

I don't post much these days but I do lurk now and then to see how the wind is blowing.

Lots of talk about sovereign default / sovereign debt crisis.

Can anyone paint a picture for me of what a UK default would look like? Is it a Mad Max scenario or a rerun of the 1970s or... ?

EG

Would state employees still be paid?

Would bank savings be nominally safe? Would National Savings deposits?

Would daily life for most (working, shopping at the supermarket, etc) continue as usual?

How would it affect inflation and interest rates?

and any other consequences I've missed.

Many thanks

SU

[dances with sheeple]

Hi all

I don't post much these days but I do lurk now and then to see how the wind is blowing.

Lots of talk about sovereign default / sovereign debt crisis.

Can anyone paint a picture for me of what a UK default would look like? Is it a Mad Max scenario or a rerun of the 1970s or... ?

EG

Would state employees still be paid?

Would bank savings be nominally safe? Would National Savings deposits?

Would daily life for most (working, shopping at the supermarket, etc) continue as usual?

How would it affect inflation and interest rates?

and any other consequences I've missed.

Many thanks

SU

Lots of misplaced anger, aimed at immigrants, suicide depression rates skyrocket, very quiet high st`s and ghost towns in the evening, eventual emergence of a government who can make a go of sorting things,end of massed influx of forgeign workers, end of benefits for otherwise healthy fat chavs who won`t work, return to much bigger food production etc in the UK, less gadgets, more healthy young people working the fields and all shagging like rabbits behind the haystack. Realisation that unless you really are Jay Z or whoever and can work a crowd of fifty thousand you are not a celebrity or "wealthy" ,realisation that people like "posh" are in reality very very ill in body and mind, and a move away from these types as role models.

My memories of the 70`s are three day week,rubbish in the street for ages, lots of power cuts. The depression years were still very much in living memory then though, and working class people just adapted, got the candles out and the oil lamps, beans on toast was considered a good meal. People will still do this, but there will be a lot of cognitive disonance if that is the right word, and many used to spending 800 quid on a handbag or pair of shoes will simply go bonkers.

Moving further into the future, a John Wyndham/ John Christopher future is possible?

[Guest Noodle]

Lots of misplaced anger, aimed at immigrants, suicide depression rates skyrocket, very quiet high st`s and ghost towns in the evening, eventual emergence of a government who can make a go of sorting things,end of massed influx of forgeign workers, end of benefits for otherwise healthy fat chavs who won`t work, return to much bigger food production etc in the UK, less gadgets, more healthy young people working the fields and all shagging like rabbits behind the haystack. Realisation that unless you really are Jay Z or whoever and can work a crowd of fifty thousand you are not a celebrity or "wealthy" ,realisation that people like "posh" are in reality very very ill in body and mind, and a move away from these types as role models.

My memories of the 70`s are three day week,rubbish in the street for ages, lots of power cuts. The depression years were still very much in living memory then though, and working class people just adapted, got the candles out and the oil lamps, beans on toast was considered a good meal. People will still do this, but there will be a lot of cognitive disonance if that is the right word, and many used to spending 800 quid on a handbag or pair of shoes will simply go bonkers.

Moving further into the future, a John Wyndham/ John Christopher future is possible?

Apart from the suicide and anger bit . . . sounds like a great place to be!

When?

[Goat]

Can anyone paint a picture for me of what a UK default would look like? Is it a Mad Max scenario or a rerun of the 1970s or... ?

Iceland, without the fish.

[Live Peasant]

Oilopoly: Putin, Power and the Rise of the New Russia (Paperback) has a very good description about how traditional power and status was subverted by those who were fortunately placed and ruthless enough during the Russian collapse.

Very much reinforces the Dmitry Orlov account in his video lectures.

Can anyone paint a picture for me of what a UK default would look like? Is it a Mad Max scenario or a rerun of the 1970s or... ?

10 days of snow and the Great British Public were crying about the lack of facilities. Some people are in for a shock.

Edited January 15, 2010 by linuxgeek

[0q0]

Lots of misplaced anger, aimed at immigrants, suicide depression rates skyrocket, very quiet high st`s and ghost towns in the evening, eventual emergence of a government who can make a go of sorting things,end of massed influx of forgeign workers, end of benefits for otherwise healthy fat chavs who won`t work, return to much bigger food production etc in the UK, less gadgets, more healthy young people working the fields and all shagging like rabbits behind the haystack. Realisation that unless you really are Jay Z or whoever and can work a crowd of fifty thousand you are not a celebrity or "wealthy" ,realisation that people like "posh" are in reality very very ill in body and mind, and a move away from these types as role models.

My memories of the 70`s are three day week,rubbish in the street for ages, lots of power cuts. The depression years were still very much in living memory then though, and working class people just adapted, got the candles out and the oil lamps, beans on toast was considered a good meal. People will still do this, but there will be a lot of cognitive disonance if that is the right word, and many used to spending 800 quid on a handbag or pair of shoes will simply go bonkers.

Moving further into the future, a John Wyndham/ John Christopher future is possible?

You're joking. These days the people will probably just go down DFS and get another sofa at 0% Pay Nothing Until 2101 and there will be the usual queue of cars at Brent Cross. Honestly, people just don't care any more as long as they can shop - and they'll find a way even if their cards are cut up. Well - the South anyway. Maybe up North they are more savvy and regrettably sometimes rather less fortunate financially.

[Guest Noodle]

Iceland, without the fish.

Round of applause there I think, good one!

[dances with sheeple]

Apart from the suicide and anger bit . . . sounds like a great place to be!

When?

The realisation that we are in trouble is here now, no one I talk to denies that they are very worried about the economy. I think after the election the fear and distress is going to ramp up quite a bit,as someone said,if ten days of snow has people complaining they are in for a scary time as the cutbacks begin?

[Guest Noodle]

The realisation that we are in trouble is here now, no one I talk to denies that they are very worried about the economy. I think after the election the fear and distress is going to ramp up quite a bit,as someone said,if ten days of snow has people complaining they are in for a scary time as the cutbacks begin?

Just had the same 1 hour conversation with an English expat here. We're all thinking the same thing. We all know. We all know that the indicators the politicians use as an excuse are inflating because they're bailing out their friends, the people that caused this.

I have zero confidence in the five years to be honest. Reckon I've got just enough to see us through this living very tight.

I am worried.

[dances with sheeple]

You're joking. These days the people will probably just go down DFS and get another sofa at 0% Pay Nothing Until 2101 and there will be the usual queue of cars at Brent Cross. Honestly, people just don't care any more as long as they can shop - and they'll find a way even if their cards are cut up. Well - the South anyway. Maybe up North they are more savvy and regrettably sometimes rather less fortunate financially.

DFS will be gone this year IMO. All points of the compass

[Guest_chris c-t_*]

Hi all

I don't post much these days but I do lurk now and then to see how the wind is blowing.

Lots of talk about sovereign default / sovereign debt crisis.

Can anyone paint a picture for me of what a UK default would look like? Is it a Mad Max scenario or a rerun of the 1970s or... ?

This..

http://fpc.state.gov...ation/39301.pdf

Edited January 15, 2010 by chris c-t

[Once in a lifetime]

and any other consequences I've missed.

Many thanks

SU

The Government set/fix their own interest rate.

[Goat]

The Government set/fix their own interest rate.

Oh no they don't.

[0q0]

DFS will be gone this year IMO. All points of the compass

You'll have to prise the Harlequin Shopping Centre carrier bags from their cold, dead hands, I tell thee nothing will stop 'em! If a three-minute warning was announced you might see a few divert from Primark into John Lewis with the words "I think I'd rather be nuked in an aspirational department store than have me body found near the £4.99 denim jeans."

[Once in a lifetime]

Oh no they don't.

Wasn't the bill for WW2 paid at 2%.

final payment finished in the last decade.?

[Goat]

Wasn't the bill for WW2 paid at 2%.

final payment finished in the last decade.?

That was an intergovenrmental loan from the US.

These days the government needs to finance its activities by the issue of bonds. If the buyers don't like the rate offered they don't buy the bonds.

[Selling up]

Thanks all.

Any answer to the question of whether this would affect the safety of bank deposits or National Insurance savings?

[Three Pint Princess 2]

It would be a missed interest payment for a month probably, like Argentina.

[Live Peasant]

It would be a missed interest payment for a month probably, like Argentina.

Something like this you mean?

[#1 on West side]

Thanks all.

Any answer to the question of whether this would affect the safety of bank deposits or National Insurance savings?

BUMP...

Like the OP, I am also interested in the impact on bank deposits or National Insurance savings in the event of a Sov Default. Any thoughts?

[Mish Mash]

These days the people will probably just go down DFS and get another sofa at 0% Pay Nothing Until 2101 and there will be the usual queue of cars at Brent Cross.

Yes, I think the same thing happened in Argentina.

[Tiger Woods?]

BUMP...

Like the OP, I am also interested in the impact on bank deposits or National Insurance savings in the event of a Sov Default. Any thoughts?

I guess it will be like Argentina - they tak all your US dollars/old pesos and give you new Argentinian pesos which are valued overnight at half what they were the day before.

Or they could do what North Korea just did and steal it all for the public good.

[alexays]

I guess it will be like Argentina - they tak all your US dollars/old pesos and give you new Argentinian pesos which are valued overnight at half what they were the day before.

Or they could do what North Korea just did and steal it all for the public good.

I posted this very question on the automatic earth website - Ilargi responded as below:

https://www.blogger.com/comment.g?blogID=4921988708619968880&postID=2721422421104786807

Argentina seems a good example for a sovereign default. Slums building around cities, that sort of thing.

Would state employees still be paid?

Not all, and not the same money. Both the number of workers and their nominal pay will fall, likely by a lot, many services will no longer be available.

Would bank savings be nominally safe?

I would doubt that. I think Argentina confiscated all dollar holdings and changed them to (new) peso's, and people could access just $100 a week (?!)

Would National Savings deposits?

Not very likely.

Would daily life for most (working, shopping at the supermarket, etc) continue as usual?

Much would disappear, food availability would suffer greatly.

How would it affect inflation and interest rates?

The general point is that, in effect, a new currency was launched in Argentina (greatly devalued). I'm sure that wiped out much in the way of savings deposits as well. If the new currency gives you a new pound for each old pound, but the new one is worth just 10% of the old one, much is lost.

Inflation and interest could be very erratic initially, as in the first five years.

But Argentina did all this in a world that otherwise largely functioned. Going forward, we may see a dozen countries failing at the same time. And it's a bit everybody's guess from there on in.