Debts of nations

[NKVD]

They say that today nations are getting more and more into debts, economists say they are shoveling problems in front for the future generations. i"ve search on the matter on internet (my local librairy, google and wikipedia) about the debts of nations in the 1400's to 1700. didnt found anything on that, i read small bits everywhere and there that some nations were highly in debts. but it seems they got out of it now.

From the top of my head. France after Napoleon. and recently i've read the story of Colombus (Colon) . he was ready 8 years before 1492 to go cross the atlantic but Espana didnt have enough money due to their war against the islam Maures. they even had to borrow from people in the court for the trip because the banks refused. how did they get out of it ? bankruptcy ? is that easy like that for a nation ? I think Alberta is the only exception with being free of debt!

 

[Cutlass]

Before the modern era governments that could not easily meet their debts either repudiated them, fought a war against their creditor, or, because money was specie, adulterated it.

 

[NKVD]

how can you fight a war against banks ?

 

[LightSpectra]

Nations sometimes did declare bankruptcy. Spain under Philip II went bankrupt a few times, for example.

 

[innonimatu]

They say that today nations are getting more and more into debts, economists say they are shoveling problems in front for the future generations. i"ve search on the matter on internet (my local librairy, google and wikipedia) about the debts of nations in the 1400's to 1700. didnt found anything on that, i read small bits everywhere and there that some nations were highly in debts. but it seems they got out of it now.

From the top of my head. France after Napoleon. and recently i've read the story of Colombus (Colon) . he was ready 8 years before 1492 to go cross the atlantic but Espana didnt have enough money due to their war against the islam Maures. they even had to borrow from people in the court for the trip because the banks refused. how did they get out of it ? bankruptcy ? is that easy like that for a nation ? I think Alberta is the only exception with being free of debt!

At the time the spanish just weren't willing to give money to an idiot like Columbus, who had miscalculated the diameter of the planet. Eventually he persuaded Isabella to finance the trip.
But the spanish did went bankrupt a series of times in the 17th century, even despite all the american gold. It was easy: they refused to pay and there wasn't much the creditors could do about it. That's what being a state is all about.
Well, except for that little incident with some mercenaries in Antwerp...

The French also went bankrupt several times. The French Revolution happened after the king sought to raise new taxes because of a looming bankruptcy (something about servicing debt taken to pay for a war over some colonists' right to independence).

 

[Cutlass]

how can you fight a war against banks ?

Not all lending was from banks. Some of it was other governments.

 

[NKVD]

what stops nations to stop paying the same way 17th century's nations did it ?

 

[Brian Shanahan]

The Washington Consensus, and globalisation stop countries form repudiatiing their debts. When you've got multinational corportations and an extremelyrich elite combining to fund massive insurrections if you try, and willing to throw you a few crumbs from the table if you keep to thier perscriptions it is kind of hard not to throw off the shackles. Of course some countries have a helping hand in this area (more commonly known as Hugo Chavez).

 

[Cutlass]

Mainly the consequences are a lot greater. But you also have to realize that many countries have not paid their debts in recent decades. They've been granted some form of debt relief.

 

[Brian Shanahan]

Forcing countries to privatise all public services, slash wages, end social wlfare and raise prices of essential goods and services inexchange for extension of loand deadlines with the extra interest added on is not a form of debt relief. Only for September 11th happening the results of the first Durban conference back in 2001 might have made some difference, and even with the giant dislocation after the terrorist atack some good came out of Durban, i.e. the mass boycott of the WTO by the Third World, and the freeing of Latin America (which had its own September 11th) from the dead hand of the Chicago School of Economics.

 

[Cutlass]

Yes, there was a lot of opposition to debt relief. But you're ignoring that many countries did in fact get actual debt relief.

 

[Brian Shanahan]

Who? all I can remember is that the G8 leaders spouting a lot of windy air in order to get close to pixie head (you know who I mean, he's universally reviled in Ireland), and then deciding to cancel a timy amount ofdebt in exchange for extreme fre market liberalisation, case in point Iraq.

 

[xchen08]

On the original question, bankrupcy in a developed country (or undeveloped for that matter) is very, very difficult, and absolutely the last resort. This is because governments raise funds by selling bonds even when their budget is balanced because the stream of tax income and other government income is not and never will be identical with the stream of government expenditures, which often have surge expenditures with very long term payoff. While actual bond prices are determined by the open market, in general, the price approximates the present discounted value of the bond's face value and coupon payments under the prevalent zero risk interest rate adjusted by a risk premium. When a modern government declares bankrupcy, it is essentially declaring that it will not pay the face value or coupons of the bonds it sold. This sends the risk premium sky high, since the buyers of bonds will no longer trust the government to pay any new bonds that it issues. This essentially renders the government utterly unable to raise funds at all.

Need a major infrastructure project to fix decaying roads and bridges that can potentially revitalize your entire economy? Well, better get used to building it in bits and pieces over the next 30 years, cause you will never be able to raise funds for it.

Or of course, you can go begging to the IMF, and then again refuse to pay 10 years later, whining about the oppression of the evil capitalists of the West, and their devil magic Chicago school of economics.

 

[NKVD]

i still really understand why my countries gives billions to poor countries when it is already one of the most in debt country

 

[Cutlass]

Who? all I can remember is that the G8 leaders spouting a lot of windy air in order to get close to pixie head (you know who I mean, he's universally reviled in Ireland), and then deciding to cancel a timy amount ofdebt in exchange for extreme fre market liberalisation, case in point Iraq.

Ironically, G8 nations. Germany got a lot of debt relief once upon a tine.

 

[Masada]

Britain's taken the IMFs money twice now to avoid disaster

 

[civ_king]

i still really understand why my countries gives billions to poor countries when it is already one of the most in debt country

wait, I thought Canada was in the process of paying off it's debt?

 

[xchen08]

Britain's taken the IMFs money twice now to avoid disaster

And adjusted their spending and economy, then paid it back. Britain also paid off the loans it took from the U.S. in WWI and WWII and even the Marshall Plan funds. There is nothing wrong with borrowing money from an international organization when ordinary fundraising mechanisms prove insufficient, but there is quite a bit wrong with begging money from such an organization, understanding full well that there are requirements attached and eventual repayment is expected, then acting surprised that the money isn't free.

 

[Lord Baal]

Before the modern era governments that could not easily meet their debts either repudiated them, fought a war against their creditor, or, because money was specie, adulterated it.

You left out expelling the Jews and seizing their property. In Spain they also had Moriscos for this, and Henry VIII put a new spin on it by expelling the Catholic Church.

 

[Masada]

And adjusted their spending and economy, then paid it back. Britain also paid off the loans it took from the U.S. in WWI and WWII and even the Marshall Plan funds. There is nothing wrong with borrowing money from an international organization when ordinary fundraising mechanisms prove insufficient, but there is quite a bit wrong with begging money from such an organization, understanding full well that there are requirements attached and eventual repayment is expected, then acting surprised that the money isn't free.

Er thanks for taking a comment and inventing a context for it.