Comments on: The IMF revisits sovereign bankruptcy http://blogs.reuters.com/felix-salmon/2013/10/21/the-imf-revisits-sovereign-bankruptcy/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Alexaisback http://blogs.reuters.com/felix-salmon/2013/10/21/the-imf-revisits-sovereign-bankruptcy/comment-page-1/#comment-48469 Tue, 29 Oct 2013 02:29:35 +0000 https://blogs.reuters.com/felix-salmon/?p=22633#comment-48469 .

It is far better then what is currently occurring

money going straight to the banks that took the risk
and profited from the risk in the first place

and then get paid back on the taxpayers dime.

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By: Alexaisback http://blogs.reuters.com/felix-salmon/2013/10/21/the-imf-revisits-sovereign-bankruptcy/comment-page-1/#comment-48468 Tue, 29 Oct 2013 02:28:20 +0000 https://blogs.reuters.com/felix-salmon/?p=22633#comment-48468 .

Finally someone is thinking.

” Hence the IMF’s latest idea, which is not (yet) a fully-fledged proposal, but which is intended to become one at some point. Basically, if you’re a country with a high and possibly unsustainable debt load, then new IMF loans are going to come with the mother of all strings attached: you’re going to have to stop paying back your existing private creditors in full and on time. Instead, you’re going to have to restructure those loans, somehow — term them out, force them to be rolled over — and in doing so you’re going to see all of the ratings agencies, and all of your CDS contracts, unambiguously declare that you have defaulted on your debts. ”

– Who cares if you are declared defaulted in your debts.

You are bankrupt or IMF would not be lending.

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By: GSA http://blogs.reuters.com/felix-salmon/2013/10/21/the-imf-revisits-sovereign-bankruptcy/comment-page-1/#comment-48458 Sun, 27 Oct 2013 12:22:53 +0000 https://blogs.reuters.com/felix-salmon/?p=22633#comment-48458 Thanks for a great session, which put many interesting issues on the table. My recent post on voxeu.eu “IMF Failings in the EZ Crisis” raises problems from another perspective.

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By: JohannesBorgen http://blogs.reuters.com/felix-salmon/2013/10/21/the-imf-revisits-sovereign-bankruptcy/comment-page-1/#comment-48425 Tue, 22 Oct 2013 07:42:09 +0000 https://blogs.reuters.com/felix-salmon/?p=22633#comment-48425 Funny that the only thing that actually makes sense in this excellent paper is the conclusion :-). Terrible thinking from both sides (IMF vs buy side to oversimplify). Domestic currency debt is an internal thing and defaulting or not is a tax / monetary issue. On external debt, well, just let the market do its job. So at the end of the day, like Felix rightfully says, it’s all about the Eurozone and the solution won’t come from academic thinking on spread compression or legal technicalities on pari passu…

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2013/10/21/the-imf-revisits-sovereign-bankruptcy/comment-page-1/#comment-48424 Tue, 22 Oct 2013 02:19:17 +0000 https://blogs.reuters.com/felix-salmon/?p=22633#comment-48424 “This would also give more time for the Fund to determine whether the problem is one of liquidity or solvency.”

Can anyone think of a Sovereign default that just a liquidity problem? As far as I can tell all national defaults to date save Argentina have been due to solvency issues rather than liquidity issues. Argentina was more of a screw you we ain’t payen issue.

To me a liquidity issue is what happened to GE in 2008… oh wait… ahh that 100 billion in 1 year or shorter debt… ahh… we’re like totally good for that in the long run… but OBVIOUSLY we need to roll most of that paper guys…. I mean we can’t pay all of you upon maturity… these loans and leases are against jet engines, locomotives, office buildings… stuff with a 20+ year life and positive cash flows. These are good assets… but we can’t sell them to make our bond payments because right now there are no buyers.” -THATS LIQUIDITY.

Sovereigns basically never have liquidity issues. Maybe Cypress could have one if they really hit the lottery with that huge gas discovery. If they were a noble race of people they might say… ah heck we’ll pull in all the oil majors and do some huge LNG deals and when the cash starts coming in 5-10 years later we’ll pay out the proceeds to our international creditors. If Cypress committed to that they would be the first case of a nation with a liquidity issue rather than a solvency issue.

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