…What Happens when Countries Go Bankrupt?
There is a very interesting article in Spiegel Online from November 4th that I didn’t notice until today. It talks about the myriad challenges that bankrupt nations now face and uses the 2001 crisis in Argentina as an example of what happens when a country goes bankrupt.
They also discuss Argentina’s current economic prospects:
“And the sound of pots and pans being banged together is back. President Cristina Fernandez, who succeeded her husband Nestor Kirchner in 2007, increasingly resembles the hapless de la Rúa. Last week, she presented her version of the “Corralito” — the term used to describe the freezing of bank accounts in 2001 — when she ordered the nationalization of private pension funds, allegedly to prevent the funds from going bankrupt.
But economic experts believed that Fernandez’s true objective in nationalizing the private deposits, which are worth $30 billion (€24 billion), is to avert a government bankruptcy. Columnist Mario Grondona criticized the president, likening her to “a captain trying to save a sinking ship by bailing it out with a bowl from the kitchen.“
Interesting and relevant reading no matter where you are.