US.gov kills another good internationalist idea.

(good thing I'm losing my job next Friday.)

I think that the banks feared that bankruptcy protection for countries could see them having to take cents on the dollar, or payment freezer which they wouldn't like, but I reckon in the long term its better for everyone than a massive default and the country equivalent of scrabbling down the back of the sofa to find money to pay the rent.

Genrally what happens now is the IMF hands over money to meet loan payments (to banks and countries) in exchange for financial strictures like closing schools and hospitals or firing civil servants in a rather short-termist knee jerk way. International protection from creditors would give a country a chance to belt tighten in a more considered and constructive way and the banks will just have to wait for their money.

Pete that's not what I was saying at all. One should ask who's making the money at banks, it sure isn't the employees, sure they get paid but that's not where the real money is. I can be fairly sure that hstencil's CEO has not taken a pay cut recently.

I'm not attacking the banks for the sake of attacking the big nasty banks, btu for there short term outlook on problems such as this. And the fact is the US government shot this proposal down and as always, especially with this government, you have to follow the money.

So say a couple of months of defaults followed by a bail out looks good on the balence sheet at the end of the year, whereas six months bankruptcy followed by cents on the dollar looks like a big hit on the balence sheet even if it mean that a revenue stream is secure years into the future.

1. bailouts are automatic and guaranteed to happen (has Argentina been bailed out yet? Turkey fucked its chances on getting another loan because of crossing the U.S. over the Iraq war)...
and
2. these bailouts mean that money goes straight from the WB or IMF to the country then to the creditor. Those institutions have strict (if sometimes misguided) policies on reforms that need to be in place before they bail out a country.

Also, while I have sympathy for citizens in Argentina, I don't have much sympathy for civil servants who may lose their jobs, as they've clearly let their people down. Let's not pretend that Argentina's problems are entirely due to outside forces - economic mismanagement has been a problem there for ages. Not to mention that I don't think electing Peronistas is gonna help, either.

Bailouts do not necessarily happen but they often do and the money does generally go to sating the slavering jaws of creditors (not always banks sometimes its a neighboring country that needs money for something that it sold the defaulting country). But the reforms and bailouts tend to be kneejerk reactions caused by crises built up over years. There is no international mechanism for a country to say, 'look we're having some difficulties, can we gain protection to sort some stuff out'. Corporations seek chapter 11 (Administration, UK) to restructure, so why shouldn't countries. it seems reasnoble to me. If Argentina had been able to seek protection when its Peso-Dollar peg started to go wrong there would have been less upheaval with in the country (5 finance ministers (or was it presidents) in 2 months).

If a country is able to seek protection then there is a better chance that everyone will get their money back sooner. Which is of course not what banks want, ideally a bank wants a loan to go on for ever with the interest being taken care of. Anything that makes it easier for countries to reduce their debt burden is not good for banks as it will hit their revenues.

Save yourself the printing costs of a newsletter, I'll just read the blog.

Exactly, which is why most countries don't bother reducing their debt unless they absolutely must. However, for every country that pleads "Chapter 11", someone else still ends up paying....

Its will be the big banks and the rich countries which is as it should be. I'm sure the IMF wouldn't make it easy to do.

Abrogating the ABM is probably one of the key causes of North Korea restarting its Nuclear Weapons and Missile programmes.

Aiding foriegn development helps us all . If we help devlop the economies of the poorest nations that improves the global economic outlook.

We offer bankruptcy protection to the most badly managed and corrupt corporations so why not to countries where peoples lives, even more than just their livelihoods are at stake.

Global poverty is the key cause of terrorism, war, refugees, and asylum seekers. If we can solve the problems of global poverty we can solve many of the problems that currently concern us.

Furthermore it is a moral duty to help those less fortunate than ourselves.