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What's many people forget is that local governments themselves are special types of corporations (specifically "municipal corporations"). They can even go bank
by dmatech 6y ago
What's many people forget is that local governments themselves are special types of corporations (specifically "municipal corporations"). They can even go bankrupt (unlike the states whose devolved power they use).
- hertzrat 6y agoWhole nations declare bankruptcy sometimes
- dragonwriter 6y agoNo, they don't. Whole nations just decide to repudiate debt.
- loveistheanswer 6y agoWhats the practical difference?
- pmontra 6y agoMuch like people countries have to return some money every month. A country can fail to pay a debt on very specific date but pay the debt it has to give back one month later.
- dragonwriter 6y agoUnlike a person—and relevant to repudiation—a sovereign debtor can just say “I’m not paying you and there is no one with the legal power to compel me otherwise”, and can do so even if they are solvent, and the main effect (usually) is it just makes it harder to borrow for a period of time.
- dragonwriter 6y ago> Whats the practical difference? Bankruptcy involves someone else determining the alteration of rights and obligations under an established legal framework. Repudiation of debt is just exercise of sovereign power by the sovereign debtor. (In between the two is non-bankruptcy bailouts, where the debtor isn't the sovereign, but the relief is a specifically targeted exercise of sovereign power rather than an adjudication under a preexisting legal framework.)
- pmontra 6y agoAgreed. To add some context, here is a list of default events by countries. I suggest to sort the table by date. https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises Update: this is not a list of default events, but a list of crises. Some of them are default events, some are not.