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That's a reasonable take for private businesses, and it would reflect poorly on that businesses reputation, when the government does it the trust is also lost,
by ender341341 4y ago
That's a reasonable take for private businesses, and it would reflect poorly on that businesses reputation, when the government does it the trust is also lost, but there's also more consequences the bigger the starting trust was. There's a reason even with low interest rates US bonds are popular, if they default the rest of your investments are likely SOL too.
The US faced similar issues previously before the federal government stepped in and outlawed states defaulting. https://en.wikipedia.org/wiki/State_defaults_in_the_United_States https://en.wikipedia.org/wiki/State_defaults_in_the_United_S...
- JamesianP 4y agoIt would be more analogous to some state announcing it will not bail out a state-sponsored corporate enterprise, and instead allow it go bankrupt in a downturn. From another perspective it is sanity, protecting taxpayers from being on the hook for speculation. The entire complaint here hinges on some kind of butterfly-effect argument, plus the precise wording of a "guarantee" that was only pointed at vaguely in the article.
- ender341341 4y agoIf the state won't follow through on it' guarantees in this case why would you assume they will on others, that guarantee is why investors are willing to take lower rates on those bonds in the first place.