"You're assuming that if banks "went bankrupt" they would stop functioning altogether, which they, of course, wouldn't."
Sigh.
It depends on the country. In many countries, BK means the company is dissolved.
" When you say "No import, no export" -- that's a bit of an exaggeration."
No, it isn't. Late last year the Capemax ships almost ground to a halt. Capemax ships are the 100k+ ton capacity ships that move things like grains, iron ore, coal, etc. The reason why they stopped moving was that the banks no longer trusted letters of credit for those large amounts. Without the letters of credit, no shipments could be authorized.
"There are still motivated sellers and buyers, and the fact that credit markets are disrupted does not imply they can't find ways to make business happen."
Some countries resorted to barter. Iran, for example, struck some deals to trade oil for rice. But, you can't effectively run international trade on a barter basis. Which is why it was dropped centuries ago. |
