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What Happens After a Default? Country defaults tend to be very different than businesses or individuals. Instead of going out of business, countries are faced

What Happens After a Default? Country defaults tend to be very different than businesses or individuals. Instead of going out of business, countries are faced with a number of options. Often times, countries simply restructure their debt by either extending the debt's due date or devaluing their currency to make it more affordable. In the aftermath, many countries undergo a rough period of austerity followed by a period of resumed (and sometimes rapid) growth. For instance, if a country devalues its currency to pay its debt, the lower currency valuation makes their products cheaper for export and helps its manufacturing industry, which ultimately helps jumpstart its economy and make debt repayment easier. https://www.thebalance.com/what-happens-when-a-country-defaults-1978981 https://www.thebalance.com/what-happens-when-a-country-defau...

totaldude87 5y ago
i remember talks about Greece going default, is it any different ?
- gopalv 5y ago
  > Greece going default, is it any different ? Greece used Euros, so the default in Greece was borne by everyone in the euro zone. The ECB got all the reputation of the Bundesbank in terms of inflation fighters. Portugal & Ireland for instance got pulled in because of Greece, due to the shared currency. The Russian situation might have some lenders sort of leaning in, depending on the politics of the process. India & Russia did some sort of hard peg on the Ruble for debt (India owed USSR, to be exact), instead of letting it float in Rubles vs USD.
nine_zeros 5y ago
Debt owed to Russian citizens - ratings downgrade and devaluation of currency only Debt owed to international entities - ratings downgrade, currency devaluation and a cushion from IMF that requires structural changes. In Russia's case, the structural change may be a good thing. Perhaps with amendments to the constitution that allow for alternation of power.
- supergirl 5y ago
  it’s not that Russia can’t pay. the article says Russia probably will choose not to pay. So I don’t think those things apply; it’s not a typical default
jbverschoor 5y ago
The “west” will provide capital in exchange of property rights to for example land or resources. This is also China’s play in Africa

totaldude87 5y ago

i remember talks about Greece going default, is it any different ?

gopalv 5y ago
> Greece going default, is it any different ? Greece used Euros, so the default in Greece was borne by everyone in the euro zone. The ECB got all the reputation of the Bundesbank in terms of inflation fighters. Portugal & Ireland for instance got pulled in because of Greece, due to the shared currency. The Russian situation might have some lenders sort of leaning in, depending on the politics of the process. India & Russia did some sort of hard peg on the Ruble for debt (India owed USSR, to be exact), instead of letting it float in Rubles vs USD.

nine_zeros 5y ago

Debt owed to Russian citizens - ratings downgrade and devaluation of currency only Debt owed to international entities - ratings downgrade, currency devaluation and a cushion from IMF that requires structural changes. In Russia's case, the structural change may be a good thing. Perhaps with amendments to the constitution that allow for alternation of power.

supergirl 5y ago
it’s not that Russia can’t pay. the article says Russia probably will choose not to pay. So I don’t think those things apply; it’s not a typical default

jbverschoor 5y ago

The “west” will provide capital in exchange of property rights to for example land or resources. This is also China’s play in Africa