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Yea, because after frequently defaulting they have no problem to attract new lenders.

Just how stupid do you think people are?

Ahem.

Fitch Upgrades Iceland Rating To First Step Of Investment Grade (FEBRUARY 17, 2012)

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 08:13:06 AM EST
[ Parent ]
Different situation.

Iceland never defaulted. They just (prudently) refused to guarantee certain debt of their failed banks (something that Ireland should have studied much more closely before doing the opposite).

They found other creative solutions to maintain a banking sector sufficient to service their (relatively small) domestic economy; solution which may or may not work in bigger states.

If investors did learn something from that is "do not lend money to loosely regulated Icelandic banks" - which do not exist any more anyway.

They also might learn "trust the instincts of Icelandic politicians" - which actually could improve their bonds' reputation.

by cris0 on Sat Feb 18th, 2012 at 09:10:19 AM EST
[ Parent ]
With this statement you have lost whatever credibility you had.

In the United States, Cris? Your contribution is really unwelcome. You should spend more time on US politics.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Sat Feb 18th, 2012 at 09:40:15 AM EST
[ Parent ]
In the United States, Cris?

That's the default setting for new users...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 09:42:11 AM EST
[ Parent ]
talking about default....

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Sat Feb 18th, 2012 at 09:49:57 AM EST
[ Parent ]
ah.

hmm.

Thanks for the pointer. Corrected.

FWIW, this kind of mandatory data collection is not a good idea. That particular selection list would benefit from an "undefined" or "world citizen" line.

by cris0 on Sat Feb 18th, 2012 at 10:09:25 AM EST
[ Parent ]


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 10:21:42 AM EST
[ Parent ]
ET 1.01 you mean?

Would be good.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 18th, 2012 at 10:43:18 AM EST
[ Parent ]
ET 1-plus-epsilon.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 10:46:00 AM EST
[ Parent ]
what are you talking about?
by cris0 on Sat Feb 18th, 2012 at 09:56:37 AM EST
[ Parent ]
Iceland defaulted on its depositor guarantee. Which has far higher seniority than mere government bonds.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 09:42:49 AM EST
[ Parent ]
except, as to my knowledge, it didn't.

Uk and the Netherlands' loud yelling to the contrary notwithstanding Iceland made it clear very early that it only considered Icelandic domestic savers guaranteed; and afaik those were compensated to the legal limit.

Aside from that, even if you were right and Iceland had really changed the order of seniority in favor of its bondholders here, that again would boost its reputation with bond investors. The increase of which was the original point Migeru was making.

by cris0 on Sat Feb 18th, 2012 at 11:37:56 AM EST
[ Parent ]
Uk and the Netherlands' loud yelling to the contrary notwithstanding Iceland made it clear very early that it only considered Icelandic domestic savers guaranteed; and afaik those were compensated to the legal limit.

Yeah, except that under the relevant international treaties and domestic law, domestic and foreign depositors are equally covered by depositor insurance. Because depositor insurance is based on the country the bank lives in, not the country the depositor lives in.

That's an insane rule, of course, but no more insane than expecting Greece to pay for Germany's export subsidies.

If an ex post facto law can change a default into a not-default, then I propose that Greece et al introduce such a law stating that all government debt issued prior to such and such date is payable in Monopoly money.

Problem solved!

But if you still don't like the Icelandic example, you can have Argentina, Russia and 1920s Germany as examples of the world not ending just because you go with the Argentina Alternative.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:56:30 AM EST
[ Parent ]

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