On December 23, 2001, the government declared the biggest debt default in history, $100 billion. It then took the extraordinary step of refusing to negotiate with creditors, instead imposing its own conditions. By restructuring its debt, Argentina was thus able to secure a 75% reduction.
That is, ultimately, what this is about.. The global financial "power elite" trying to pry additional profits for their lack of lending standards, from global taxpayers, via sovereign debt.
But this is a balance sheet recession.. People can only pay so much more in taxes if they lack good jobs. They are defaulting on, or paying down, debt.
I have few problems with banks taking haircuts on sovereign debt.. I think the question is how quickly these losses must be realized so it doesn't totally screw up any semblance of economic growth.
I also believe the commodity prices need to come down in order to foster increased growth. There is a cost to manufacturing anything. And if we're going to sustain labor/consumer income, then we need cheaper raw material prices.
But, of course, that requires stronger currencies and risks deflation.. Wicked circle..
Hawk |
