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zugzwang

Seven Countries Near Bankruptcy

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Moody's Investors Service rates seven countries with a credit risk of Caa1 or worse. All of them heading for bankruptcy or having just narrowly escaped it.

1. Ukraine (Ca)

2. Greece (Caa3)

3. Venezuela (Caa3)

4. Belize (Caa2)

5. Jamaica (Caa2)

6. Argentina (Caa1)

7. Belarus (Caa1)

http://www.usatoday.com/story/money/business/2015/08/05/24-7-wall-st-countries-near-bankruptcy/31164239/

Puerto Rico defaulted on its $58 million debt repayment this week for the first time in its history. With its failure to repay creditors, the commonwealth joins the ranks of countries and governments burdened by crippling debt levels and extremely low credit ratings.

Moody's Investors' Service rates seven countries Caa1 or worse, several tiers lower than Ba1, which still carries a significant credit risk. These countries are approaching or have narrowly escaped bankruptcy. Ukraine is rated Ca, which is currently the lowest credit rating of any country reviewed by Moody's.

All seven national economies instill relatively little confidence among investors. However, Jamaica's credit rating was upgraded by Moody's this year, and Argentina's and Belize's credit ratings remained stable. The remaining four countries, on the other hand, were downgraded.

A country's history of fiscal responsibility, including past defaults, and current compliance with IMF debt repayment plans, are major contributors to Moody's evaluations.

Extremely high debt levels, which while not always a feature of unhealthy economies, can also contribute to a country's poor credit rating. The debt of four of the seven countries was equal to more than 75% of GDP. In Jamaica and Greece, debt was well over 100% of GDP.

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Many of these countries are primed to default or have already been given debt relief (Greece). When they finally call time on their bond holders, it will start the chain reaction to the next financial crash and the domino effect will reverbarate around the world.

The rich will have covered their collective backsides, mainstreet will pay a heavy price. There won't be many hiding places....

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There's either going to be an almighty crash, OR future generations will become incredibly weak consumers as they will spend much of their income on paying back all that debt without any direct consumption. In other words, it ain't gonna happen. So a crash is the only outcome.

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There's either going to be an almighty crash, OR future generations will become incredibly weak consumers as they will spend much of their income on paying back all that debt without any direct consumption. In other words, it ain't gonna happen. So a crash is the only outcome.

Or you can hold back the day of reckoning by appearing to be credit worthy and paying zero interest. So the UK continues 2015 at a frenetic pace, buoyed by full employment and public sector largesse with apparently no credit limit.

Just have to hope the confidence in UK plc lasts here and abroad.

edit. And they think Belarus has a problem with debt at 39% of GDP....try 80% and another 200% in off balance sheet health and retirement promises.

Edited by crashmonitor

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Or you can hold back the day of reckoning by appearing to be credit worthy and paying zero interest. So the UK continues 2015 at a frenetic pace, buoyed by full employment and public sector largesse with apparently no credit limit.

And why not - it's only costing us £100Bn extra debt a year, and we're actually paying BACK in interest alone over £1Bn a week right now*. So what if we end up paying £2Bn a week by 2025 - we can always pair down the NHS, policing, fire services etc - maybe just get rid of them all. At least the councils are going broke right now - we could probably do away with them altogether by about 2020 and have all of that privatised.

Everything's looking super-stable thanks to our robust and sustained recovery.

* http://www.telegraph.co.uk/finance/economics/10849333/Interest-bill-on-UKs-1.27-trillion-debt-to-hit-1bn-a-week.html

Edited by canbuywontbuy

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How badly mis-managed has the Venezuelan economy been?

Apparently Chavez nationalised a popular consumer electronics company and then made them sell their goods at heavily discounted rates (for his own popularity) - a successful private company turned into a bankrupt nationalised one in no time.

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Puerto Rico defaulted on its $58 million debt repayment this week for the first time in its history. With its failure to repay creditors, the commonwealth joins the ranks of countries and governments burdened by crippling debt levels and extremely low credit ratings

Puerto Repo

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How badly mis-managed has the Venezuelan economy been?

Electricity 75% from hydro (most efficient) and the world's biggest oil reserves and nearly bankrupt.

They elected a real-life Corbyn. A popular and populist leftie, clueless about the economy.

And they re-elected him. Probably at least in part as an act of defiance against Uncle Sam's attempts to bully them and even mount a coup against the clown.

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