I'd consider debt renegotiation as being "sort of defaulting". Like we do loan forgiveness with developing countries when it helps them stabilize their economy because they become a friendly market for our goods and services. I think we will find ourselves in that sort of situation. Loan forgiveness, rebundling debt and issuing the refinanced package at a lower rate, that sort of thing, in exchange for friendly relations, guaranteed open markets, basically reducing debt but creating a stronger market going forward.
One of the paradoxical things is that you don't want to have someone owe you too much money. Sure, its nice that they are in debt to you. But if they owe you too much money then the value of that debt starts to plummet and you risk losing the value of all the debt. Far better to write off some of the debt, make sure it is manageable and then use that to establish a strong relationship going forward so you can continue to reap the financial rewards. That was the subject of another thread today on dealing with clients that don't pay but it is true in international finance as well. The deals are often just more complicated because countries are competitors as well as clients of each other. Judah On Wed, Feb 11, 2009 at 8:44 PM, Gruss Gott <[email protected]> wrote: > >> Judah wrote: >> higher taxes and lower spending but I'd say that it is likely to go >> hand in hand with refinancing our debt on more favorable terms. >> Overall I'd actually guess it will be a combination of 1, 2 and 3. > > Fair enough, but it CAN'T be a combination. You can't sort of default > and you can't pay off enough debt with a little inflation. > > So it's gotta be raising taxes and lowering spending. > > But you're right that it's prolly pretty likely that we'll renegotiate > the debt. However that's not going to prevent 1,2 or 3, just delay > the choice. > > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:288205 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
