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What happens if the UK goes bankrupt (if it isn't already)?
Comments
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Degenerate wrote: »I'm still trying to get my head around what the point of a CDS for a sovereign nation that issues its own currency is. At worst such countries will stealth default - you'll get your pounds, dollars or yen back, they just won't be worth as much. Surely this certain repayment of the principal and interest means the CDS is worthless as it will never be triggered? Do they have some sort of provision for currency devaluation?
Soverign nations who issue debt in their own currency sometimes default. I know economists say this should theoretically never happen. But it did happen to Russia, and it did happen to Britain in the 70's. Sometimes it is better for a country to outright default than to hyperinflate its way out of debt.“The ideas of debtor and creditor as to what constitutes a good time never coincide.”
― P.G. Wodehouse, Love Among the Chickens0 -
aren't there different forms of default?Soverign nations who issue debt in their own currency sometimes default. I know economists say this should theoretically never happen. But it did happen to Russia, and it did happen to Britain in the 70's. Sometimes it is better for a country to outright default than to hyperinflate its way out of debt.
you don't have to be bankrupt to default.
a failure to pay or even repudiation is a default and so is debt restructure (not sure how sovereigns can restructure debt though)0 -
Soverign nations who issue debt in their own currency sometimes default. I know economists say this should theoretically never happen. But it did happen to Russia, and it did happen to Britain in the 70's. Sometimes it is better for a country to outright default than to hyperinflate its way out of debt.
Are you sure ?
I don't think the UK has ever defaulted on its debts (at least from 17th C onwards).0 -
Are you sure ?
I don't think the UK has ever defaulted on its debts (at least from 17th C onwards).
There was a kind of default after WW2 when the UK issued very low interest Gilts that did not have maturity dates that I think creditors were obliged to take.
Another example of a UK default is changing the retirement age for Government employees and state pension recipients.
AFAIK, it's been a very long time since the UK missed a coupon payment on a Gilt.0 -
There was a kind of default after WW2 when the UK issued very low interest Gilts that did not have maturity dates that I think creditors were obliged to take.
Another example of a UK default is changing the retirement age for Government employees and state pension recipients.
AFAIK, it's been a very long time since the UK missed a coupon payment on a Gilt.
It's not really a default is it ?
Is it that much different than when the link between state pensions and earnings was changed in 1980 ?
Arguably the effect of the chance in the way state pensions was calculated had a far greater impact.0 -
It's not really a default is it ?
Is it that much different than when the link between state pensions and earnings was changed in 1980 ?
Arguably the effect of the chance in the way state pensions was calculated had a far greater impact.
It is a default. If I have a debt to you which is due on your 65th birthday and I then say, 'Actually I'll repay you in another 3 years' then I've defaulted.
Moving from the earnings to inflation link is also a default.
It may not be much of a default but it still represents a failure to pay what was promised. That is a default.
The explicit reason that pensions aren't included in the national debt is that the Government can default on them by a simple change in the law.0 -
It is a default. If I have a debt to you which is due on your 65th birthday and I then say, 'Actually I'll repay you in another 3 years' then I've defaulted.
Moving from the earnings to inflation link is also a default.
It may not be much of a default but it still represents a failure to pay what was promised. That is a default.
The explicit reason that pensions aren't included in the national debt is that the Government can default on them by a simple change in the law.
I would disagree. State pensions arent a debt due to be repaid when one is 65. They are a current payment by those who can work to those who, on average, are too old.
If life expectancy and the general health of the population increases it is perfectly reasonable within the objectives of the scheme for the state pensionable age to increase. There is no default of any kind.
You get a similar thing with private pensions. One may have saved all one's life on the basis of the then current annuity rates. In recent years they have, say, halved. Would you regard that as a default by the insurance companies?0 -
I would disagree. State pensions arent a debt due to be repaid when one is 65. They are a current payment by those who can work to those who, on average, are too old.
If life expectancy and the general health of the population increases it is perfectly reasonable within the objectives of the scheme for the state pensionable age to increase. There is no default of any kind.
There is a promise to make a payment in return for payments into the National Insurance fund. The date of the pension is deferred which is a default. Try telling the tax man that you are happy to pay your NI but you'll do it in 3 years.You get a similar thing with private pensions. One may have saved all one's life on the basis of the then current annuity rates. In recent years they have, say, halved. Would you regard that as a default by the insurance companies?
With a private pension, your pension provider offers to invest on your behalf to the best of its ability in return for a fee. The only exception I can think of was Equitable Life that made a promise which it defaulted on. As a result, EL is bankrupt.0 -
http://www.thefreedictionary.com/defaultv. de·fault·ed, de·fault·ing, de·faults
v.intr.1. a. To fail to do what is required.
b. To fail to pay money when it is due.
http://www.investorwords.com/1350/default.htmlFailure to make required debt payments on a timely basis or to comply with other conditions of an obligation or agreement0
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