Sovereign debt default - Revision history

Pestergaines: /* Links */ +res

2013-10-13T09:55:27Z

Links: +res

← Older revision		Revision as of 09:55, 13 October 2013
Line 30:		Line 30:

	==Links==		==Links==
			* {{md\|6554\|There Is Life after Default\|Peter G. Klein\|October 2013}}
	* [http://www.washingtonpost.com/opinions/americas-default-on-its-debt-is-inevitable/2013/10/10/1451d416-302c-11e3-bbed-a8a60c601153_story.html America’s default on its debt is inevitable] by James Grant, October 2013		* [http://www.washingtonpost.com/opinions/americas-default-on-its-debt-is-inevitable/2013/10/10/1451d416-302c-11e3-bbed-a8a60c601153_story.html America’s default on its debt is inevitable] by James Grant, October 2013
	* {{w\|Sovereign default}} on Wikipedia		* {{w\|Sovereign default}} on Wikipedia

Pestergaines: Links created.

2013-10-13T09:53:27Z

Links created.

← Older revision		Revision as of 09:53, 13 October 2013
Line 28:		Line 28:
	==References==		==References==
	{{Reflist}}		{{Reflist}}

			==Links==
			* [http://www.washingtonpost.com/opinions/americas-default-on-its-debt-is-inevitable/2013/10/10/1451d416-302c-11e3-bbed-a8a60c601153_story.html America’s default on its debt is inevitable] by James Grant, October 2013
			* {{w\|Sovereign default}} on Wikipedia

	[[Category:Economic concepts]]		[[Category:Economic concepts]]
	{{Stub}}		{{Stub}}

Pestergaines: +words

2013-03-20T07:50:25Z

+words

← Older revision		Revision as of 07:50, 20 March 2013
Line 1:		Line 1:
	A '''sovereign default''' is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]; also page 111 and 137. Referenced 2011-02-17.</ref>		A '''sovereign default''' (or '''public default''') is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled [[debt]] is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]; also page 111 and 137. Referenced 2011-02-17.</ref>

	{{See also\|Public debt}}		{{See also\|Public debt}}

Pestergaines: On the transparency of the data on domestic debt.

2011-07-11T22:24:02Z

On the transparency of the data on domestic debt.

← Older revision		Revision as of 22:24, 11 July 2011
Line 1:		Line 1:
	A '''sovereign default''' is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]; also page 111. Referenced 2011-02-17.</ref>		A '''sovereign default''' is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]; also page 111 and 137. Referenced 2011-02-17.</ref>

	{{See also\|Public debt}}		{{See also\|Public debt}}
Line 11:		Line 11:
	Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.		Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.

	The list of defaults by Reinhart and Rogoff from 1800 to 2007 includes more than 70 cases of domestic defaults, compared to 250 defaults on external debt. (Noting, however, that domestic defaults are far more difficult to detect.)		The list of defaults by Reinhart and Rogoff from 1800 to 2007 includes more than 70 cases of domestic defaults, compared to 250 defaults on external debt. (Noting, however, that domestic defaults are far more difficult to detect.) The data on domestic debt of most countries lacks transparency. Even the [[United States]] have an extraordinarily opaque accounting system, replete with potentially costly off-budget guarantees.

	[[Mexico]] had nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.		[[Mexico]] had nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.

Pestergaines: /* Inflation */ A note on literature.

2011-07-11T22:01:24Z

Inflation: A note on literature.

← Older revision		Revision as of 22:01, 11 July 2011
Line 20:		Line 20:
	Unexpected increases in [[inflation]] are the de facto equivalent of outright default, for inflation allows all debtors (including the government) to repay their debts in currency that has much less purchasing power than it did when the loans were made.<ref name="Reinhart_Time" /> Default through inflation became more commonplace over the years as [[fiat money]] displaced coinage as the principal means of exchange. This can probably be explained by a change in the willingness of governments to expropriate through various channels and the abandonment of a [[gold standard\|gold]] (or other metallic) standard.		Unexpected increases in [[inflation]] are the de facto equivalent of outright default, for inflation allows all debtors (including the government) to repay their debts in currency that has much less purchasing power than it did when the loans were made.<ref name="Reinhart_Time" /> Default through inflation became more commonplace over the years as [[fiat money]] displaced coinage as the principal means of exchange. This can probably be explained by a change in the willingness of governments to expropriate through various channels and the abandonment of a [[gold standard\|gold]] (or other metallic) standard.

	Inflation conditions often continue to worsen after an external default. Shut out from international capital markets and facing collapsing revenue, governments that have not been able to restrain their spending have, on a recurring basis, resorted to the inflation tax, even in its most extreme [[hyperinflation]]ary form.<ref name="Reinhart_Different">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p.75-77. Referenced 2011-07-11.</ref>		Inflation conditions often continue to worsen after an external default. Shut out from international capital markets and facing collapsing revenue, governments that have not been able to restrain their spending have, on a recurring basis, resorted to the inflation tax, even in its most extreme [[hyperinflation]]ary form.

			As [[Carmen M. Reinhart\|Reinhart]] and [[Kenneth S. Rogoff\|Rogoff]] note, the extensive scholarly literature on inflation has been silent on the connection of inflation and domestic defaults.<ref name="Reinhart_Different">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p.75-77, 132. Referenced 2011-07-11.</ref>

	{{Main\|Inflation}}		{{Main\|Inflation}}

Pestergaines: Added number of defeaults; expanded ref.

2011-07-11T21:57:06Z

Added number of defeaults; expanded ref.

← Older revision		Revision as of 21:57, 11 July 2011
Line 1:		Line 1:
	A '''sovereign default''' is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]. Referenced 2011-02-17.</ref>		A '''sovereign default''' is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]; also page 111. Referenced 2011-02-17.</ref>

	{{See also\|Public debt}}		{{See also\|Public debt}}
Line 10:		Line 10:
	==Domestic debt default==		==Domestic debt default==
	Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.		Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.

			The list of defaults by Reinhart and Rogoff from 1800 to 2007 includes more than 70 cases of domestic defaults, compared to 250 defaults on external debt. (Noting, however, that domestic defaults are far more difficult to detect.)

	[[Mexico]] had nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.		[[Mexico]] had nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.

Pestergaines: /* Inflation */ More on inflation.

2011-07-11T20:49:15Z

Inflation: More on inflation.

← Older revision		Revision as of 20:49, 11 July 2011
Line 16:		Line 16:

	==Inflation==		==Inflation==
	Unexpected increases in [[inflation]] are the de facto equivalent of outright default, for inflation allows all debtors (including the government) to repay their debts in currency that has much less purchasing power than it did when the loans were made.<ref name="Reinhart_Time" />		Unexpected increases in [[inflation]] are the de facto equivalent of outright default, for inflation allows all debtors (including the government) to repay their debts in currency that has much less purchasing power than it did when the loans were made.<ref name="Reinhart_Time" /> Default through inflation became more commonplace over the years as [[fiat money]] displaced coinage as the principal means of exchange. This can probably be explained by a change in the willingness of governments to expropriate through various channels and the abandonment of a [[gold standard\|gold]] (or other metallic) standard.

			Inflation conditions often continue to worsen after an external default. Shut out from international capital markets and facing collapsing revenue, governments that have not been able to restrain their spending have, on a recurring basis, resorted to the inflation tax, even in its most extreme [[hyperinflation]]ary form.<ref name="Reinhart_Different">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p.75-77. Referenced 2011-07-11.</ref>

	{{Main\|Inflation}}		{{Main\|Inflation}}

Pestergaines: typo

2011-06-28T11:45:47Z

typo

← Older revision		Revision as of 11:45, 28 June 2011
Line 11:		Line 11:
	Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.		Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.

	[[Mexico~~\|Mexico’s~~]] nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.		[[Mexico]] had nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.

	Some of the domestic defaults that involved the forcible conversion of foreign currency deposits into local currency have occurred during banking crises, [[hyperinflation]]s, or a combination of the two (like defaults in Argentina, Bolivia, and Peru).<ref name="Reinhart_Time" />		Some of the domestic defaults that involved the forcible conversion of foreign currency deposits into local currency have occurred during banking crises, [[hyperinflation]]s, or a combination of the two (like defaults in Argentina, Bolivia, and Peru).<ref name="Reinhart_Time" />

Pestergaines: /* Domestic debt default */ +link

2011-06-28T08:26:27Z

Domestic debt default: +link

← Older revision		Revision as of 08:26, 28 June 2011
Line 11:		Line 11:
	Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.		Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.

	[[Mexico\|Mexico’s]] nearly defaulted in 1994–1995 on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided		[[Mexico\|Mexico’s]] nearly defaulted in [[1994 economic crisis in Mexico\|1994–1995]] on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.
	with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.

	Some of the domestic defaults that involved the forcible conversion of foreign currency deposits into local currency have occurred during banking crises, [[hyperinflation]]s, or a combination of the two (like defaults in Argentina, Bolivia, and Peru).<ref name="Reinhart_Time" />		Some of the domestic defaults that involved the forcible conversion of foreign currency deposits into local currency have occurred during banking crises, [[hyperinflation]]s, or a combination of the two (like defaults in Argentina, Bolivia, and Peru).<ref name="Reinhart_Time" />

Pestergaines: Created initial page.

2011-02-16T23:13:18Z

Created initial page.

New page

A '''sovereign default''' is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/s8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Chapter 1'' and [http://press.princeton.edu/chapters/p8973.pdf Preface] (pdf), see also the [http://press.princeton.edu/titles/8973.html summary page]. Referenced 2011-02-17.</ref>

{{See also|Public debt}}

==External debt default==
External debt crises involve outright default on a government’s external debt obligations—that is, a default on a payment to creditors of a loan issued under another country’s jurisdiction, typically (but not always) denominated in a foreign currency, and typically held mostly by foreign creditors. [[Argentina]] holds the record for the largest default; in 2001 it defaulted on more than $95 billion in external debt. In the case of Argentina, the default was managed by reducing and stretching out interest payments. Sometimes countries repudiate the debt outright, as in the case of [[Mexico]] in 1867, when more than $100 million worth of peso debt issued by Emperor Maximilian was repudiated by the Juarez government. More typically, though, the government restructures debt on terms less favorable to the lender than were those in the original contract (for instance, [[India|India’s]] little known external restructurings in 1958–1972).

Although the time of default is classified as a crisis year, in a large number of cases the final resolution with the creditors (if it ever was achieved) seems interminable. [[Russia|Russia’s]] 1918 default following the revolution holds the record, lasting sixty-nine years. [[Greece|Greece’s]] default in 1826 shut it out of international capital markets for fifty-three consecutive years, and [[Honduras|Honduras’s]] 1873 default had a comparable duration.<ref name="Reinhart_Time" />

==Domestic debt default==
Domestic public debt is issued under a country’s own legal jurisdiction. In most countries, over most of their history, domestic debt has been denominated in the local currency and held mainly by residents. Domestic debt crises typically occur against a backdrop of much worse economic conditions than the average external default. Usually, however, domestic debt crises do not involve powerful external creditors and are usually less noticed.

[[Mexico|Mexico’s]] nearly defaulted in 1994–1995 on its domestic government debt (in the form of ''tesobonos'', mostly short-term debt instruments repayable in pesos linked to the U.S. dollar), until the country was bailed out by the [[International Monetary Fund]] and the [[U.S. Treasury]]; this debt was widely held by nonresidents. Since 1980, [[Argentina]] has defaulted three times on its domestic debt. The two domestic debt defaults that coincided
with defaults on external debt (1982 and 2001) attracted considerable international attention. However, the large-scale 1989 default that did not involve a new default on external debt—and therefore did not involve nonresidents—is scarcely known in the literature. There were also many defaults on domestic debt that occurred during the [[Great Depression]] of the 1930s.

Some of the domestic defaults that involved the forcible conversion of foreign currency deposits into local currency have occurred during banking crises, [[hyperinflation]]s, or a combination of the two (like defaults in Argentina, Bolivia, and Peru).<ref name="Reinhart_Time" />

==Inflation==
Unexpected increases in [[inflation]] are the de facto equivalent of outright default, for inflation allows all debtors (including the government) to repay their debts in currency that has much less purchasing power than it did when the loans were made.<ref name="Reinhart_Time" />

{{Main|Inflation}}

==References==
{{Reflist}}

[[Category:Economic concepts]]
{{Stub}}