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To: NVDave

I think it has to do with controlled vs uncontrolled bankruptcy.

Controlled - start talking with lenders months before and agree for them to take a haircut etc.

Uncontrolled - Ala Argentina, I can’t pay you and maybe 10 years later we can agree.


11 posted on 07/13/2010 2:09:32 AM PDT by mainsail that ("A man will fight harder for his interests than for his rights" - Napoleon Bonaparte)
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To: mainsail that

Ah, I see where you’re going here. Quite true, yes.

Given the size and scope of the US debt problem, I think trying to claim that we could control it would kill people with fits of hysterical laugher, leading to asphyxia. We’re riding *the* world monster of debt problems, and I think we’re rapidly approaching a point where we no longer control it — it will control us.

The problems in the EU are still small enough (on individual sovereign basis) that they could be dealt with in the way you say (ie, start talking about the issue and negotiating haircuts before the drop-dead date), as long as they don’t fall over like dominoes or have heavy derivative amplification.

Germany sees the US, and where we’re going, and quite logically says “We don’t want to go there.” Hence their resistance to being the soft touch to take on liabilities to bail everyone else out without strict consequences that change behavior.


13 posted on 07/13/2010 11:24:47 AM PDT by NVDave
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