Economics

Rok platebních neschopností suverénů?

Dec 31, 2015 Carmen M. Reinhart

MIAMI – Když přijde řeč na suverénní dluh, často je špatně chápán pojem „platební neschopnost“ (default). Téměř nikdy neznamená úplné a stálé zavržení celého objemu dluhu; ostatně splaceny (byť jen zčásti) byly nakonec i dluhopisy z dob carského Ruska po revoluci roku 1917. Nesplácení – podle agentur provádějících úvěrový rating „platební neschopnost,“ dotkne-li se soukromých věřitelů – obvykle vyvolává rozpravu o restrukturalizaci dluhu, která může sestávat z odkladů splatnosti, seškrtání kuponových plateb, odkladných lhůt či snížení nominálních hodnot (takzvané „sestřihy“).

Jsou-li nám vodítkem dějiny, takové rozpravy mohou být v roce 2016 velice časté.

Hromadění dluhu a platební neschopnosti se, podobně jako tolik jiných rysů globální ekonomiky, objevují obvykle v cyklech. Od roku 1800 globální ekonomika prošla několika takovými cykly, přičemž podíl nezávislých zemí podstupujících restrukturalizaci během daného roku kolísá mezi nulou a 50 % (viz obrázek). Nejsou sice neobvyklá období klidu trvající jednu až dvě dekády, ale po každé pokojné periodě následuje nová vlna platebních neschopností.

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0 Comments on this paragraph, 28 Comments on this article

jose oscategui Jan 2, 2017

I wonder why Carmen Reinhart does not mention Italy? It is perhaps the potentially largest default country ever.
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Adrian Eritrea Future Jan 5, 2016

The very same processes, taking place for many years, will never end, unless a completely new form of the governance will be introduced, which is an inevitable process, the only question is about a final shape of it.

The world will survive all defaults, as at the very end the money is only the printers activity, without a self-sustaining value.

The reason for making all improvements so difficult is that the victims (nations), are represented by the Politicians who are causing all problems, to get elected, and elected.

Describing Greece very briefly, there was nothing normal in the country finance, from the day one of joining the EU. All rescues were also abnormal.

In the HIPC, many governments do not have a clue about the countries management, or they don't want to really introduce it. Please try to find the most simple things, like the HIPC municipalities websites, with the activity updates, management team, local citizen rights and contact.

Even many Governments do not have any websites, and they do have an internet access.

It is still overwhelming greed and politics, rather than public servants responsibility.

The main reason for this status quo is that the Politicians are not a real victims, they use their power to survive, by blaming anyone else.

The real war is taking place between the Investment Bankers, and the Politicians.

Bankers are making money, Politicians are blaming the Bankers for it, and they are printing the money, fighting all kind of deficits, often caused by themselves, to bring a short-term relieve, rather than focusing on the overall development processes.

And the problem here is always the same – who helps with the money, wants to maintain the power, and the political influence over the sovereign borrowers, without letting them out of the trap.

If they become to strong, they will start to build up their own influence zone over the others.
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Alex Imas Jan 4, 2016

It's quite likely that what makes Greece the only advanced economy to default is the fact that, overwhelmingly, advanced economies borrow in their own currency. Unless Congressional Republicans decide that they don't feel like paying the country's bills, the US can't default, at least as long as the Fed prints the currency we borrow in. Greece's default seems to be a symptom of the Euro-straitjacket, more than anything else.
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TC B Jan 4, 2016

Professor Reinhart,
The US, as one of many nations with a crashing fiat currency, will have a choice between sovereign default (asserting political sovereignty) and surrendering sovereignty to debtors (banks). In the case of Greece the leaders were compensated for assenting to the dismemberment of the country and the division of its assets. So whether this happens in the US will depend upon the strength and dedication of support for sovereignty. This support, if it occurs, will be based either on patriotism, an understanding that the currency with which bribes might take place is essentially worthless, or a realization that without sovereignty the rights of humans living in the US will have no constitutional basis and hence the nation will be living under absolute tyranny.
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Rob Carter Jan 4, 2016

For Certain USA Is buggered see Professor Vice/Minister USSR Nicoli Kondratiev to understand 400 years repeats that 90 years ago he "wave'd" it for 2029 of course he couldn't anticipate the digital speed-up making 2016-19 more likely for a 2040-50 "Democratic Socialist" end to "Capitlism" the Robyn Hood dream come true.
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Rob Carter Jan 4, 2016

OK Crman again you are taking the USA Prejudices & Vested interests False press conclusions too literally to uggest "Lately, many emerging-market currencies have slid sharply, increasing the cost of servicing external dollar debts. Export and public-sector revenues have declined, giving way to widening current-account and fiscal deficits. Growth and investment have slowed almost across the board. " That's crap in the Past AUD $1 has cost USD$1.2 to buy, in the 1980's I was paying from my nightclub for USMC R&R Navy boys at late night (when banks weren't open) only 80 cents. That went back to $1.10 when Whitlam's RED Scheme fixed our employment etc. USD is now buying $1AUD for USD $0.72 cents. It is mainly the USD that has fluctuated most and is currently about 30% to 40% overvalued in my view as Gold is in USD price and USA has short sold 2,700mt without Congress approval to prop the really fallen USD net worth, they can now buy cheaper as overvalued USD makes gold re-buys cheap, whereas it makes it more expensive to the Chinese buying in USD they pay more for.
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Rob Carter Jan 4, 2016

Carman I wonder when I read your comments "View/Create comment on this paragraphAnother economy in serious danger is the Commonwealth of Puerto Rico, which urgently needs a comprehensive restructuring of its $73 billion in sovereign debt. Recent agreements to restructure some debt are just the beginning; in fact, they are not even adequate to rule out an outright default." Did you not realize what this does to stall judgment day indefinitely? REFER ARGENTINA. By having different "Restructure some debts" not all means if any bankruptcy filing starts by you or them they can't settle because of "Pari Passu' International law effects that SCOTUS can't resolve.
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joey jay Jan 3, 2016

As if we really are stupid and do not know how much debt the US has, how the Bretton Wood agreement is broken and how the IMF, UN, World ank are in the process of getting the structere into place in order to introduce Special Drawing Rights as the new currency to substitute the dollar as the world currency...Go figure, how stupid some of you experts, think we the plebe are...
We also read the think tanks that subscribe to ìntroduce`new ideas to the a fore mentioned bodies and the papers that their `bureaucrats write to come up to solutions to the so called problems created by globalization, fiat money, banksters, etc...
Boy you could be a little bit more intelligent on your èxplanation`...
Either you are paid to write stuff like this or you are disingenous.
It is enough to go to N. Roubine and others to realized the US house of cards is up and there are people`providing distractions, not just Trump, but you and Nina Khrusheva as well.
The S is toast...the level of poverty and internal and external debt, without counting state and municipal levels of debt and personal debts is huge and you are concerned about emerging marketsÉ
Stop the propaganda and do some real research instead....
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Stavros A. Jan 3, 2016

Under a broad set of economic and financial scenarios, Greek debt was and remains un-sustainable with probability 95% .
This was analysed in a paper I co-authored with Andrea Consiglio and discussed in a Vox.eu column.
http://www.voxeu.org/article/greek-debt-sustainability-devil-tails

What is surprising is not Professor Reinhart's forecast for 2016, but the fact it did not come true in 2015!
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Jeremiah Hartnett Jan 3, 2016

It seems as if continuing crisis are likely. How they are handled now becomes paramount. It is likely can kicking will not be effective. Too much capital is now locked in without many options. When debt payments become problematic and ZIRP exists, we are most likely near debt capacities.
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Joshua Ioji Konov Jan 3, 2016

Never before have been so strong exogenous economic forces: a combinations of the ongoing globalization, rising productivity, improving technologies, the Internet and the Chinese industrializations that aggregated national debts by many countries and individuals; and if Quantitative Easing has not been used such debt could had overwhelmed even the most developed markets indeed; but when the developing markets are discussed where were not acting central banks the debt accumulation will reach ever high levels - the currently used economics has been a total failiure !
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Procyon Mukherjee Jan 2, 2016

2016, especially the second half, will have more than the Sovereign defaults looming at large; one should be wary about the corporate defaults as well, especially the oil and commodities sector has much to be desired, with the window of opportunity that made allowance for hedges to act will be non-existent going forward. $1.5 Trillion is the debt added in the oil sector if we go by the BIS report; all other commodities have anything between $0.5 Trillion to $0.7 Trillion.
The effect on the banking sector cannot be benign, especially when the lender of last resort is on an extended sabbatical.
- Steve Hurst Jan 2, 2016
  
  @Procyon
  Cue QE
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Christopher T. Mahoney Jan 1, 2016

You might want to make a distinction between countries indebted in local vs foreign currency. It is the latter that is lethal.
- Jonas Rolim Jan 5, 2016
  
  Good point. Brazil has olnly 5% of it's debt in foreign currency. The economy is falling apart, but a default is not expected.
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- John Doyle Jan 3, 2016
  
  Exactly! A sovereign nation cannot go broke in its own currency. It can always create it at will. The pernicious idea of borrowing in a foreign currency should be recognised as a dangerous move, yet it is always part of the asset stripping policies of the IMF and World Bank in collusion with the established colonial powers.
  The general ignorance of economics is behind all these misfortunes as politicians are economically speaking completely uneducated and easily led by those in the know with aims on their resources.
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Walter Gingery Jan 1, 2016

The most striking feature of the Figure -- indeed, it almost screams at anyone willing to look -- is the singularity from about 1950 to 1980.

To what can we attribute this period of low defaults, which is unlike any other period of comparable length? And what brought it to an end?

Maybe I'm biased, but it's hard to resist the notion that it was due to programs in the US, Europe, and Japan, that taxed the wealthy, and channeled the funds into programs to support the middle class Business, as a consequence, flourished.

According to this explanation, it is not at all surprising that things changed exactly when corporate and monied interests took control of Congress and instituted tax policies to favor their own interests.
- Steve Pressl Jan 3, 2016
  
  Kevin Phillips, Nixon aide called it the 'financalizaton'of the economy. Going from a production based to a finance/debt/leverage based system. Your right abut the 1% of by and for themselves in the period since.
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- M M Jan 2, 2016
  
  This was the age of double digits interest rates, the age of pre-world wide web and pre-globalisation, and therefore pre- High Assets Bubble.
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- Steve Hurst Jan 1, 2016
  
  @ Walter
  
  The US was not defaulting so the affluence of the US was not driving anything other than indirectly
  
  WW2 slaughtered a lot of people who would have been workers creating labour demand, as did infrastructure investment. The decline of the West started in the 70s. If you consider the boost following WW2 was caused by workers deaths in that war then the roots of the problem were earlier and probably related to the process of colonies having independence movements
  
  Again if the effect was due to WW2 then you are unlikely to see a trough like 50s and 60s and 70s again, the future norm could well be more defaults than that period. Unless of course there is a catastrophy of similar impact, which I sincerely hope does not happen
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jagjeet sinha Jan 1, 2016

90 % of Global GDP seems to originate within the G20.
The Financial Stability Board established to monitor developments within G20, perhaps seized with early warning signals.
With abundance both in Big Data as well the metrics that reveal impending problems, the exercise to prevent meltdown perhaps blatant.
If preventive actions required are not taken, it is perhaps due to unwillingness or incompetence.
Increase in interest rates is a Sovereign prerogative.
Consequential escalation of costs perhaps need a Global currency that processes transactions.
The Bitcoin best brought into IMF as the solution - up to the G19.
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M M Jan 1, 2016

Excellent study. Spot on. Two factors to add: (1) The geopolitical situation around the world and the (2) upcoming US elections. The results from these two factors are unpredictable and therefore may influence your graph either way. Regarding the interest rates in the US, although the Fed increased them, the mortgage and other lenders decreased them to their customers, so the increase had a nil effect, at least for now, to the consumer.
- M M Jan 4, 2016
  
  The stock markets crashed this morning around the world, starting with China, a dismal start of the New Year…. Geopolitics again in the play…. The answer to your questions is simple really, it is “Events and the best way to reacting to them”, and nothing but.
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- Robert Lunn Jan 3, 2016
  
  Excellent study? Nothing in this piece would have surprised anyone paying a modicum of attention to the global markets. Carmen Reinhart is very bright and gifted economist so I expect more than the obvious. For example, explain why the cycles exist? (That too is not much of a reach). Possibly tell us why countries don't learn? Could it be that these sovereigns have leaned to live with these cyclical defaults as they have yet to be priced into the debt?
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Steve Hurst Dec 31, 2015

Interest rates cannot expect to be ZIRP forever and the interest rate in the US have risen a whole 0.25%. Whilst they may rise again there has to be doubts that they will progress to any great elevation. If the emerging economies are to enter meltdown on that scenario there is something profoundly wrong with their strategy

Looking at the graph simplistically the dynamic suggests a peak is stil some way off, in fact it would suggest we are mid cycle, however who knows if new effects are at play and global debt growth continues unabated

I do not consider Greece a typical default example. Greeces problems were and still are the result of entering a common currency area with no imbalance mechanism other than localised debt. No common currency area can exisit for long without wealth transfer strong to weak within it
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