What happens when a country goes bankrupt?

supermilk1 · 11-10-2010 07:08PM #1

I know shag all about politics and the Irish economy but this sounds like a good place to learn.What will happen if in few months the country goes bust?Educate me!

ardmacha · 11-10-2010 07:32PM

I don't suppose you'd be willing to read some of the other zillion threads on the subject?

DjBryn · 11-10-2010 07:37PM

supermilk1 wrote: »

I know shag all about politics and the Irish economy but this sounds like a good place to learn.What will happen if in few months the country goes bust?Educate me!

what do you mean when ??

it is already to the tune of 1.4trillion eu:oro

Amhran Nua · 11-10-2010 07:38PM

Lets see, blow by blow, the government can't borrow from the international community any more for whatever reason. The IMF are called in and present a plan of action. Give it a few weeks and drastic measures are introduced to slash social welfare, public pensions, educational courses, child benefit, capital spending, health, public sector numbers and pay, and taxes are jacked up by 15% across the board.

Violent public sector union demonstrations force the government to recant on some parts of the cuts by hiking up taxes even more, before the rest of the country demonstrates and the government, clearly without a mandate, calls for a general election. The opposition gets in, probably FG and Labour, but are unable to ensure any payment except in IOUs.

This leads to confrontations between the public sector unions and the actual public, leading to a final acceptance on the part of the public sector that the cuts are going to happen. Mass emigration, serious strikes and withdrawal of services, and runs on banks accompany these events. Eventually the IMF returns, inspects the lot, and declares the country fit to lend to again, handing over a salutory billion or so.

That'd be my guess anyway.

Amhran Nua · 11-10-2010 07:39PM

DjBryn wrote: »

what do you mean when ??

it is already to the tune of 1.4trillion eu:oro

No its not, that number includes money passing through the IFSC which has nothing to do with the state of Ireland.

supermilk1 · 11-10-2010 08:04PM

Amhran Nua wrote: »

Lets see, blow by blow, the government can't borrow from the international community any more for whatever reason. The IMF are called in and present a plan of action. Give it a few weeks and drastic measures are introduced to slash social welfare, public pensions, educational courses, child benefit, capital spending, health, public sector numbers and pay, and taxes are jacked up by 15% across the board.

Violent public sector union demonstrations force the government to recant on some parts of the cuts by hiking up taxes even more, before the rest of the country demonstrates and the government, clearly without a mandate, calls for a general election. The opposition gets in, probably FG and Labour, but are unable to ensure any payment except in IOUs.

This leads to confrontations between the public sector unions and the actual public, leading to a final acceptance on the part of the public sector that the cuts are going to happen. Mass emigration, serious strikes and withdrawal of services, and runs on banks accompany these events. Eventually the IMF returns, inspects the lot, and declares the country fit to lend to again, handing over a salutory billion or so.

That'd be my guess anyway.

Its more positive than my guess!

rumour · 11-10-2010 08:12PM

amhran nua...pretty much agree. Any view on the time frame?

Amhran Nua · 11-10-2010 08:21PM

rumour wrote: »

amhran nua...pretty much agree. Any view on the time frame?

We won't be allowed to reach the stage where we can't borrow from the international community. Between Lenihan being laughed out of it by the red braces brigade for bending over too far and ECB support, limping cutbacks and NAMA, we can motor on for quite a while yet.

View · 11-10-2010 09:38PM

supermilk1 wrote: »

I know shag all about politics and the Irish economy but this sounds like a good place to learn.What will happen if in few months the country goes bust?Educate me!

We get to activate the EFSF. In will come the IMF and EU officials who will point out that spending 20 billion a year more than we take in taxes is moronic. The Oireachtas will then vote in favour of massive cut-backs and lay-offs of civil servants. The politicians will then claim they were "forced" to do this by the IMF and EU. Most people will probably believe the politicians and vote them back into power come the followig election....

Cookie_Monster · 11-10-2010 09:43PM

not a lot I imagine, look at the US, they've being technically broke for decades now...

http://www.brillig.com/debt_clock/

femur61 · 12-10-2010 06:31AM

ardmacha wrote: »

I don't suppose you'd be willing to read some of the other zillion threads on the subject?

Arrogant/ignorant.

MaceFace · 12-10-2010 07:18AM

supermilk1 wrote: »

I know shag all about politics and the Irish economy but this sounds like a good place to learn.What will happen if in few months the country goes bust?Educate me!

As said, we activate the EFSF which will come with a lot harsher restrictions than Greece got. The country will be run like a business with its main purpose to narrow the deficit. Society will be destroyed (think of higher crime, poorer education and health systems).

senordingdong · 12-10-2010 07:24AM

Amhran Nua wrote: »

Lets see, blow by blow, the government can't borrow from the international community any more for whatever reason. The IMF are called in and present a plan of action. Give it a few weeks and drastic measures are introduced to slash social welfare, public pensions, educational courses, child benefit, capital spending, health, public sector numbers and pay, and taxes are jacked up by 15% across the board.

Violent public sector union demonstrations force the government to recant on some parts of the cuts by hiking up taxes even more, before the rest of the country demonstrates and the government, clearly without a mandate, calls for a general election. The opposition gets in, probably FG and Labour, but are unable to ensure any payment except in IOUs.

This leads to confrontations between the public sector unions and the actual public, leading to a final acceptance on the part of the public sector that the cuts are going to happen. Mass emigration, serious strikes and withdrawal of services, and runs on banks accompany these events. Eventually the IMF returns, inspects the lot, and declares the country fit to lend to again, handing over a salutory billion or so.

That'd be my guess anyway.

Is it wrong that I'd welcome this?

I just want the whole thing over with and put to bed.

Qualitymark · 12-10-2010 07:32AM

Amhran Nua wrote: »

Between Lenihan being laughed out of it by the red braces brigade

...who caused the whole international mess themselves, the monkeymuppets :mad:

Battleneter · 12-10-2010 07:52AM

Cookie_Monster wrote: »

not a lot I imagine, look at the US, they've being technically broke for decades now...

http://www.brillig.com/debt_clock/

Actually!! the US "Officially" declared bankruptcy in 1933, and is still technically in it.

In 1933 President Roosevelt formally declared bankruptcy to the US public.

Half decent read, bit dramatised perhaps

http://fskrealityguide.blogspot.com/2007/09/did-usa-declare-bankruptcy.html

Greedy Investors will always return if a solid recovery occurs and the incentives are good.

SkepticOne · 12-10-2010 08:40AM

senordingdong wrote: »

Is it wrong that I'd welcome this?

I just want the whole thing over with and put to bed.

Unfortunately, nothing will be put to bed, imo. The same debates will occur that we're having now. It will be the continuation of a process that we've already started and will go on for years after intervention from the EFSF/IMF.

To a certain extent we've already started. In response to a collapse of revenue from the private sector the government has already cut back some services and raised taxes. Some oppose these cuts and others say they don't go far enough.

When the EFSF/IMF come, they will insist on further cuts and tax rises. Again, some will say that the cuts go too far and others will say that they don't go far enough.

Like now, there will be politicians saying that we've turned the corner and, like now, they will be premature.

derry · 13-10-2010 04:30AM

Its simple you me and the rest of the Irish peoples will become landless peasants yet again and the politions who did that will go to hang on the beaches of the Camen Islands living off the kick backs that they got to help engineer that

The exact way its all engeneered is explained by one man John Perkins who job it is is to bankrupt countruies while working for the IMF and plunder them and he wrote a book

"Confessions of an Economic Hit Man"

Here is a example you tube 101 and there are many others

Interview - Confessions of an Economic Hit Man - Part I
http://www.youtube.com/watch?v=yTbdnNgqfs8

For those that dont do you tube its simple really

Take one country rich in anything oil diamonds spuds forests whatever and bankrupt them and then turn them into endepted dept slaves for the next few hundred years

Step one bribe the local politions to take huge loans more than the country can ever hope to pay back in a million years
If the local politions wont play ball find the dirt on them and force them too, or force them out of office and replace them with suitable types that will play ball .If all else fails like the stubborn Polish governemnt who couldnt be bribed round them up one night shoot them all .then force the plane to crash someplace claim they all died in the crash and with the help of the new regime cover up the evedence of the economic coup.
Make no mistake any regime like the FF that dont take the bribes will get a bullet in the head or similar

After the country has reached some peak in boom pull the credit and bang they in the crap . Now then you say give us all your land forests oil whatever to pay back the depts .Gradualy make the regime in power make new laws to make small medium sized busness impossible with huge taxxes crazy local laws for the small operators but specail exemptions for the big companies and the locals all go bust .The big operators buy up everthing farms land houses etc dirt cheap

Result a few years later alll the locals are landless peasants renting bad accomation for high prices working in the plantations , mcdo , tesco whatever for peanuts
Yep in Irelland we been taken for a ride and in the last strages of being crapped on by the big powers and the IMF is the final coup de ta

Derry

zootroid · 13-10-2010 06:28AM

supermilk1 wrote: »

I know shag all about politics and the Irish economy but this sounds like a good place to learn.What will happen if in few months the country goes bust?Educate me!

Basically a country needs to borrow money from the bond markets, unless it is running good budget surpluses. It may even need to borrow money from the markets if it's running surpluses. This is because its expenditure is generally evenly spread throughout the year (public sector wages and social welfare), but its revenues are not (eg corporation tax receipts).

A country goes bust when it can't borrow from the markets. The markets recognise that a country might not be able to pay its debt, and so charges higher rates of interest to compensate for that risk. When the interest becomes so high that future tax revenue wont cover it, the country can no longer borrow money.

In such as scenario, the country can approach the IMF and borrow from it. The IMF will lend money, at much lower interest rates, but will do so with specific conditions attached. It might insist on cutting public sector wages, social welfare, and increasing tax rates, and increasing the rate of interest (which it would not be able to do in Ireland's case as the rate of interest is set by the ECB). Basically, the country can no longer make its own decisions with regard to fiscal policy.

Some people look at this and think the IMF coming in would be a good thing as they would be able to do what is required without fearing the political consequences. But surrendering control of your fiscal policy cannot be a good thing, and we would be much better off if the government took the right decisions now, rather than hoping it will all be ok (which is exactly what they have been doing ever since this crisis began)

senordingdong · 13-10-2010 06:45AM

zootroid wrote: »

Some people look at this and think the IMF coming in would be a good thing as they would be able to do what is required without fearing the political consequences. But surrendering control of your fiscal policy cannot be a good thing, and we would be much better off if the government took the right decisions now, rather than hoping it will all be ok (which is exactly what they have been doing ever since this crisis began)

I think surrendering control to the IMF would be better than FF having it.

derry wrote:

If the local politions wont play ball find the dirt on them and force them too, or force them out of office and replace them with suitable types that will play ball .If all else fails like the stubborn Polish governemnt who couldnt be bribed round them up one night shoot them all .then force the plane to crash someplace claim they all died in the crash and with the help of the new regime cover up the evedence of the economic coup.

Is he suggesting that they Polish Tu-154 crash was orchastrates to cover up the murder of everyone onboard?

Qualitymark · 13-10-2010 06:50AM

2002 article about the famine in Malawi:

http://news.bbc.co.uk/2/hi/business/2014396.stm

IMF denies telling Malawi to sell food

Three-quarters of Malawians are short of food

The International Monetary Fund (IMF) has denied that it recommended the sale of Malawi's strategic maize reserves just before a crop failure occurred. President Bakili Muluzi declared a state of national disaster in April and has asked for $21m (£14.4m; 22.6m euros) in international assistance for food relief.
Up to 76% of Malawians lack food and more than 300 people are reported to have died of hunger this year.

Banda says foreign donors urged the grain sale

"We did not instruct the Malawi government or the NFRA (National Food Reserve Agency) to dispose of the reserves," the IMF representative in Malawi, Girma Begashaw, told Reuters news agency.
"We have no expertise in food security policy."
Agriculture Minister Aleke Banda reportedly said last week that the IMF had encouraged the government to sell at least part of the reserve in 2000 to reduce debt.
"International donors have argued that we do not have to keep reserves at those (high) levels," Mr Banda told the BBC's World Business Report.
Food for thought
The IMF's Mr Begashaw countered that Malawi sold the maize after advice from a food consultant, hired by the government in a European Union-funded project.
He added that the country cut the reserve by two-thirds on the basis of inaccurate crop estimates.
"They thought they would have a good harvest in 2001, so they went ahead and sold all the 167,000 metric tonnes in the reserve," Mr Begashaw said.
"They did not even keep the 60,000 tonnes that their own policy required them to keep," he said.
Finance Minister Friday Jumbe told Reuters last week the government had been urged by the IMF and other donors to settle commercial debts.
Malawi then sold the food reserve to pay off a one-year commercial loan taken in 1999 to establish the reserve, he added.
Despite the food shortages, the IMF has suspended Malawi's poverty-reduction programme until it cuts government spending in its budget in June.
Grain sales
Malawi produced more than two million tonnes of maize in 1999, a national record after free seed and agricultural goods were given to three million farmers.
Mr Banda said the forecasts had predicted another bumper harvest from March 2001 but the crop failed.
Mr Jumbe said the reserve was sold in the last six months of 2000 at an average loss of more than 50%.
When news broke in January 2001 that the next crop would be well below average, prices jumped 400%.
The government called on Monday for tenders for 40,000 tonnes of locally grown maize to begin rebuilding the strategic reserve under an EU-financed project.
Britain will be a major sponsor of this year's programme to distribute free maize seeds and fertiliser to farmers, Mr Banda said on Wednesday.

derry · 13-10-2010 07:03AM

Qualitymark wrote: »

2002 article about the famine in Malawi:

http://news.bbc.co.uk/2/hi/business/2014396.stm

IMF denies telling Malawi to sell food

....snip.... Three-quarters of Malawians are short of food

The International Monetary Fund (IMF) has denied that it recommended the sale of Malawi's strategic maize reserves just before a crop failure occurred. President Bakili Muluzi declared a state of national disaster in April and has asked for $21m (£14.4m; 22.6m euros) in international assistance for food relief.
Up to 76% of Malawians lack food and more than 300 people are reported to have died of hunger this year.
.....snip..... President Banda says foreign donors urged the grain sale

.....snip....

[/SIZE]

The famine years of Ireland the Irish exported enough food to Britian and other places to feed millions of people but the Irish peasants starved as they didnt have the money to buy the food they produced

The IMF and UN and others greedy bankers have learnt that lesson well and do that smae thing to Malawi and many other countries so as to exterminate as many of the local population as they can

So if you think the IMF are nice guys you didnt look the you tube material from John Perkins who job it is is to bankrupt countries while working for the IMF and plunder them and he wrote a book

"Confessions of an Economic Hit Man"

Here is a example you tube 101 and there are many others

Interview - Confessions of an Economic Hit Man - Part I
http://www.youtube.com/watch?v=yTbdnNgqfs8

and yes starving the locals to death is one of the results John Perkins says the IMF activily hope to create when they plunder the victim countries they plunder

Derry

What happens when a country goes bankrupt?

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