government defaults?

hgllgh

Just curious about this one, but is it possible that governments can default?

Events in Dubai seem to be raising this question ...

http://news.bbc.co.uk/1/hi/business/8385164.stm

"The BBC's economics editor Stephanie Flanders said the situation in Dubai had alerted investors to the idea that you can lose money on government bonds - even if they appear to have implicit guarantees. The repercussions of Dubai's debt crisis is already making it more expensive for countries with large deficits to sell their debt.
"There are lots of other governments out there who don't have rich neighbours with oil to bail them out, who may have trouble in the next few months or years"



Is it at all possible that the UK government could default?

Masomnia

hgllgh wrote: »

Is it at all possible that the UK government could default?

Certainly possible. Though as far as I know it has never happened.

iolanthe07

I hope not. I have just bought rather a big bond in the latest National Savings issue at a good interest rate. I had hoped it would be rock solid!

Masomnia

OK, certainly possible, but very unlikely

hgllgh

iolanthe07 wrote: »

I hope not. I have just bought rather a big bond in the latest National Savings issue at a good interest rate. I had hoped it would be rock solid!

Me too ... kinda why I asked.

nearlynew

You cannot rule anything out.


Remember, the government doesn't care about you, your family or even the country.
All they care about is remaining in office.

They are lying f*cking thieves and cannot be trusted.

Arcaine

Masomnia wrote: »

Certainly possible. Though as far as I know it has never happened.

Argentina in 2002 is the last big one I think.

http://en.wikipedia.org/wiki/Argentina_default

Rochdale_Pioneers

Its almost impossible for the UK to default. Most of our debt is in Sterling (and a fair wedge owned by the Bank of England) - as we print Sterling if at some future point we had a cashflow crisis we can print currency to pay debts. Not something investors would be happy with but technically feasible. As it is for America, Japan and major EU countries.

The Argetina comparison isn't a good one - they defaulted on debt mainly in US Dollars following a large devaluation of the Peso.

If you want to see countries default on national debt, keep an eye on the baltics. Massive external debt, tiny economy, a currency not under their control.

nearlynew

Rochdale_Pioneers wrote: »

Its almost impossible for the UK to default. Most of our debt is in Sterling (and a fair wedge owned by the Bank of England) - as we print Sterling if at some future point we had a cashflow crisis we can print currency to pay debts.

I don't know whether to laugh or cry at this moronic statement.


(thanked by mistake, by the way)

hgllgh

Rochdale_Pioneers wrote: »

The Argetina comparison isn't a good one - they defaulted on debt mainly in US Dollars following a large devaluation of the Peso.
.

Isn't the pound experiencing a large devaluation?

Thrugelmir

Dubai is a state, not a sovereign country. The United Arab Emirates comprises seven semi-autonomous states of which Dubai is one. However due to its status its debt became regarded as having semi-sovereign status.

Dubai has no economy so to speak of. So has attempted to build one, on borrowed money.

On a wider issue the EU is now guaranteeing the debt of its weaker nation states such as Greece and Italy. Iceland was allowed to go bust. So we're far from being out of the mire in a global sense.

With the size of the UK banks. We have an exposure to the recession on a global scale.