Sunday, November 22, 2009

What’s a Debt Compound Spiral?

Greece tests the limit of sovereign debt as it grinds towards slump

"As far as the bond vigilantes are concerned, the Bat-Signal is up for Greece," said Francesco Garzarelli in a Goldman Sachs client note, Tremors at the EMU Periphery.

Posted by devo @ 10:10 PM (1646 views)
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7 thoughts on “What’s a Debt Compound Spiral?

  • …when did the British capitalists ever have any respect for ordinary people? Their unquenchable avarice is the real reason England is in such dire straights today…as always betrayed by her greedy few whose only dream in life is to prostitute their own people for a couple of pounds. As they have always done, and always will do if given half the chance. The British people need to reign in their capitalists once again if they aspire to live in a peaceful, happy , spiritually rewarding world. The capitalists only wish is to eat with both hands, and to chew with both jaws while their audience starves.

    Henry Hull
    on November 22, 2009
    at 08:45 PM

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  • there’s more of us than there is of them

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  • “Like Labour under Brown, idiot leaders mistook a bubble for their own skill.”

    Brilliant 🙂

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  • which leader will you follow though ?

    it might be me

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  • South America has been there, many times. In 2000/2001, Ecuador abandoned their national currency and switched to dollars for all transactions. Since then, they have been able to issue debt in dollar-denominated bonds, albeit at a higher interest rate than the US. Late last year Ecuador announced that it would be defaulting on its debt. It wasn’t the end of the world – the country has been doing ok since then.

    BBC News: Ecuador defaults on foreign debt (13 December 2008)
    President Correa gave the order not to approve a debt interest payment due on Monday, describing the international lenders as “monsters”. Speaking in the city of Guayaquil, Mr Correa said: “As president I couldn’t allow us to keep paying a debt that was obviously immoral and illegitimate”.
    Reuters: Possible scenarios after Ecuador debt default
    Here are some of the possible scenarios that Ecuador could face after its default:
    – Lawsuits and attachment of Ecuadorian assets
    – Defaulted bonds renegotiation
    – Drop in foreign and domestic investment
    – Limited multilateral credit

    Argentina defaulted on its debt in 2002. Mexico defaulted in 1982, and came close again in 1994. Why shouldn’t Greece default on its debt? What’s stopping them? It could even do so while still remaining part of the Eurozone.

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  • Looks like the FT covered this story ten months ago:

    Financial Times: Sovereign default in the eurozone and the breakup of the eurozone: Sloppy Thinking 101
    “So we may well see sovereign defaults by EU national governments, both inside and outside the eurozone.”

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  • cat and canary says:

    drewster, “Argentina defaulted on its debt in 2002. Mexico defaulted in 1982, and came close again in 1994. Why shouldn’t Greece default on its debt?”

    yeah, sell a few ancient artifacts and arrange a sort of IVA on a national scale! Spend the dosh, then walk away, no responsibilities! Ahhh, so that’s Gordon’s new election manifesto?!

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