What happens when a country goes bankrupt?

Generali

gingin wrote: »

Can anyone explain, please, what happens when a country goes bankrupt.

Obviously, I am thinking of Iceland, but is this likely happen to the UK or US and when it does happen, what happens to the country's banks, industries, personal savings, mortages, house prices?

Please move if it is on the wrong board.

A country can't go bankrupt as such as one of the points of being a sovereign nation is that you can always just print more money.

The trouble, as Zimbabwe is discovering, is the more money you print, the less each note is worth.

Iceland isn't bankrupt, it's banks probably are.

purch

one of the points of being a sovereign nation is that you can always just print more money.

Which they do, seriously diluting the value of their economy

And of course the other favourite option is just to renege on all your debts....as many Latin American nations did in the 1980's and Russia did in the 1990's (then 15-20 years later all is forgotten and you are the 'darlings' of the Investment world again)

Back in the late 1980's Banks were actually lending money to Latin American nations, in order that they could meet the interest payments on the loans that they were never going to repay.....just so those loans would still be 'performing' and the guys in the 'braces' could still collect their bonus's.

The Banks didn't learn the lessons then, which is part of why we are in this mess now !!!!

Cannon_Fodder

Generali wrote: »

one of the points of being a sovereign nation is that you can always just print more money.

So can the European Central Bank, or whoever prints the Euro, decline to print more notes for individual/several/all members of the EuroZone...?

...if they are failing to meet rules to maintain membership, for example?
...or because the Germans hate the French, and vice versa...?

i.e. make a country go properly bankrupt...?



Does whoever holds the land, on which the Bank stands, control it, i.e. could it be an excuse for a territorial dispute/war?

pickledpink

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What happens when a country goes bankrupt?
Can anyone explain, please, what happens when a country goes bankrupt.








You'll see far fewer obese people waddling about.

pickledpink

Oh, and WeighWatchers will become a thing of the past.

Generali

Cannon_Fodder wrote: »

So can the European Central Bank, or whoever prints the Euro, decline to print more notes for individual/several/all members of the EuroZone...?

...if they are failing to meet rules to maintain membership, for example?
...or because the Germans hate the French, and vice versa...?

i.e. make a country go properly bankrupt...?



Does whoever holds the land, on which the Bank stands, control it, i.e. could it be an excuse for a territorial dispute/war?

My feeling is that the Euro wouldn't cope with any sort of serious financial problems like that. My feeling also is that the Euro won't cope with a recession in France. French policy responses to harsh economic times are too inflationary for the Germans to be able to stomach.

hostman

Iceland isn't bankrupt. But it will be if it honours the savings compensation schemes.

Government's around the World should learn from this mess: You need bigger compensation pots ready to go and not rely upon sourcing funding after a collapse.

Generali

hostman wrote: »

Iceland isn't bankrupt. But it will be if it honours the savings compensation schemes.

Government's around the World should learn from this mess: You need bigger compensation pots ready to go and not rely upon sourcing funding after a collapse.

Or alternatively, don't let banks be so big and apply stricter limits on their capital adequacy.

sabretoothtigger

Iceland didnt invest in sub prime did it so its insolvent not bankrupt. So when the dust settles it will surely be poorer but still standing

clk299

My dad's got an ISA with Icesave and rang the FSA to find out the position (early this morning). He asked this question; the man from the FSA helpfully said 'due to some EU ruling, I think... it will be ok'. He didn't have the heart to tell the man that Iceland's not in the EU!