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Odious debts have odious debtors

by JakeS Wed Aug 19th, 2009 at 07:11:48 AM EST

There is a long-standing precedent for countries refusing to pay "odious" debts - debts that were run up by repressive, colonial or otherwise illegitimate regimes. Similarly, a case can be made that countries who have been saddled with unpayable levels of IMF credit should be able to jettison these liabilities.

But. Odious debts don't just happen to happen from time to time. Somebody has to agree to borrow the money.

So it is clearly a necessary (but not necessarily sufficient) condition for repudiating debt as odious that somebody in the defaulting country goes to prison. In the case of countries emerging from colonial or otherwise repressive governments, it is fairly simple to tell who needs to go to prison: The dictator or colonial magistrate, sometimes his family, usually a number of military people too.

In the case of a country that has been shock therapied by the IMF, it is less clear who needs to go to prison. But the people who precipitated the crisis that caused the IMF to bail out foreign lenders seem like good candidates. And the politicians who signed up for the IMF programme should arguably serve some time too.

Promoted by Migeru


Specifically, in the case of Iceland, it is clearly odious to demand that their taxpayers foot the bill for the fraud and gambling that was going on in their banking sector. So the Brits who got defrauded should seek redress from the fraudsters and/or their own government.

On the other hand, Iceland can hardly claim debt relief on the grounds that the debt is odious until and unless it shows some willingness to actually prosecute the fraudsters responsible. This has, as far as I can tell, never been seriously considered (nevermind prosecuting the politicians whose treasonously stupid neo-liberalism allowed the fraudsters free reign - if you believe they'll ever see prison time, I have a Bear Stearns position I wanna unload sell).

- Jake

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The Icelandic debt situation is debated at length in Chris Cook's Iceland - Can't Pay; Won't Pay - so why not a National Equity? and the comments to it.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Aug 19th, 2009 at 07:13:56 AM EST
Were the practice of legitimating debt repudiation by prosecution of those responsible for the assumption to become a recognized principle of international law it might seriously impede the ongoing, world wide fleecing of taxpayers.  Unfortunately, while Iceland has shown a willingness to throw the rascals out they have not, as yet, shown any stomach for throwing the rascals in jail.  To the contrary, many there seem intent on making the rascals whole by selling off the national patrimony.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 19th, 2009 at 08:34:54 AM EST
Were the practice of legitimating debt repudiation by prosecution of those responsible for the assumption to become a recognized principle of international law it might seriously impede the ongoing, world wide fleecing of taxpayers.  
 
Absolutely right.  Which is why there is no chance that such a principle will be recognized.  

Unfortunately, while Iceland has shown a willingness to throw the rascals out they have not, as yet, shown any stomach for throwing the rascals in jail.
 
There is no legal way to do this, as the rascals own and control the Icelandic government.  To throw the rascals out would require the overthrow by force of the Icelandic government.  Sadly, Iceland does not seem ready for this necessary step.  

The Fates are kind.
by Gaianne on Wed Aug 19th, 2009 at 08:43:00 PM EST
[ Parent ]
Didn't the Icelanders get themselves a new semi-commie government? They should be able to deal with guilty capitalist roaders.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Aug 20th, 2009 at 02:47:43 PM EST
[ Parent ]
the banks, as I understand it.  

The Fates are kind.
by Gaianne on Thu Aug 20th, 2009 at 07:40:50 PM EST
[ Parent ]
Michael Hudson develops his view in a longer article in Counterpunch. The first part is more or les the FT article, but there is much more to read:

The Specter of Debt Revolt Is Haunting Europe
Why Iceland and Latvia Won't (and Can't) Pay for the Kleptocrats' Ripoffs - Michael Hudson

Neither Britain nor Holland, neither the EU nor IMF have provided a scenario for just how Iceland is supposed to pay the debts that are being claimed. How much will personal income and living standards have to fall? What government programs must be cut back? How many defaults on domestic mortgages and personal debts will result, and how much unemployment? How much emigration will occur? The models being employed treat these dimensions of the economic problem as "externalities," but they are central to how the economic system works in practice.

The question is whether neoliberal ideology will give way to economic reality, or whether economic policy will retain the blinders that typically characterize short-term creditor-oriented policies? What is blocking a more reasonable pro-growth policy, Ms. Joly observed, is that "the Swedish presidency of the EU does not seem to be in a hurry to improve regulation of the financial sectors, and the committees with an economic focus in the Parliament are, more than ever, dominated by liberals, particularly British liberals." So Europe continues to impose a shortsighted economic ideology. Therefore, she concluded: "Mr. Brown is wrong when he says that he and his government have no responsibility in the matter. Firstly, Mr. Brown has a moral responsibility, having been one of the main proponents of this model which we can now see has gone up the spout.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Aug 19th, 2009 at 08:37:46 AM EST
Melanchthon:
"the Swedish presidency of the EU does not seem to be in a hurry to improve regulation of the financial sectors

I would be very surprised if they had acted to regulate. So far the most visible action the swedish government has taken was in the Carnegie-affair:

Carnegie Investment Bank - Wikipedia, the free encyclopedia

In the wake of the Economic crisis of 2008 and to avoid bancruptcy Carnegie Investment Bank AB was taken over by the Swedish National Debt Office on November 10, 2008. The largest shareholders at the time was Böös & Enblad AB (9,2%), Moderna Finance AB (6,4%) and Harris Associates fonder (5,3%). In May 2009, the private equity company Altor and the investment company Bure acquire Carnegie Investment Bank AB. The ambition is to re-establish Carnegie as the leading independent investment bank in the Nordic region.[1][2] The bank had broken the law by lending too much money to one customer, property magnate Maths O. Sundqvist.[3]

Carnegie was the favourite bank for the present government when it came to organising sales of governmentally owned companies, so it was not surprising that they leaped in to save this investment company. In contrast they have clearly declared that saving Volvo or Saab by nationalisation is out of the picture.

So they seem stuck in the same frame of finance=important, production=not important as their anglo counterparts. And important of course means that it must have its freedom, not be regulated and so on...

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Aug 19th, 2009 at 03:36:15 PM EST
[ Parent ]
I can't say I agree with this. Carnegie is a bank, and hence as Migeru said, special. They shareholders have lost everything, and while I'm not sure I don't think the creditors got much either.

When it comes to the cars, Volvo will probably survive. They make pretty good cars in an internatonal comparison and will get new owners of one kind or the other.

SAAB on the other hand is probably the shittiest auto manufacturer outside North America. There is really nothing worth saving in that company, except the technology portfolio (and even there SAAB has mainly gone for stupid ethanol). Currently the government is playing its part in the theater with the Koenigsegg front, which seems interested solely in plundering the public coffers, and the government only interested in not paying out any money to a doomed company or corporate plunderers, while neither being seen as the one which gave SAAB the mercy bullet.

And after all, Sweden does have to much of its economy focused on vehicle manufacturing (only Slovakia and Germany ahve more). Even if SAAB goes down, we'll still have Volvo PV, Volvo Trucks and Scania Trucks. Those truck companies are world class. The auto companies are not.

In a globalized economy with free capital flows we must play to our absolute advantages, not waste energy on saving industries were we won't be number one.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Aug 20th, 2009 at 02:59:10 PM EST
[ Parent ]
First, I am delighted and a bit surprised that they are not handing over big loads of cash to anyone that promises to save SAAB. I am not advocating a particular action there, but the passive attitude in that case is clearly contrasted with the active attitude in the case of Carnegie.

And banks are special, but Carnegie was and is the typical kind of noxious bank that should be regulated away.

Carnegie Investment Bank - Wikipedia, the free encyclopedia

Carnegie Investment Bank AB is a Swedish company which specialises in stockbroking, investment banking and asset management.

Remember the crucial notion of the Glass-Steagall Act

In the nineteenth and early twentieth centuries, bankers and brokers were sometimes indistinguishable. Then, in the Great Depression after 1929, Congress examined the mixing of the "commercial" and "investment" banking industries that occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions' securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass Steagall Act.

While stockholders were wiped out, did not managment by and large stay? As I remember it, the CEO was the only one who had to go and he was replaced by his right hand. So they saved the managment and the careers of the upper echelon in the company. Probably people they had good relations to as this was the go-to bank for privatisations.

Anyway, my critique was mainly centered on handling this crises in a way that did not show any realisation of the systematic problems. Thus, I do not think any such action should be expected during the swedish presidency.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Aug 20th, 2009 at 03:28:12 PM EST
[ Parent ]
Since I have some emotional investment in Saab. having grown up with the cars, I thought about it, and I think you could probably make Saab work if you dropped the models other than the 9-3 and the factories other than Trolhattan, and focused a lot more on the finishing.

Also, Saab was erratic and then GM made it crappy.

by nanne (zwaerdenmaecker@gmail.com) on Thu Aug 20th, 2009 at 07:25:28 PM EST
[ Parent ]
But cars are going to be a declining market over the next few decades. So consolidating production into fewer companies makes sense.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Aug 21st, 2009 at 02:11:12 AM EST
[ Parent ]
I'm not sure that this necessarily follows. The car market is rather consolidated as it is, and this follows more from the type of product it makes than its size and whether it is growing or shrinking. Some capacity has to disappear, of course, but Saab has always been a niche manufacturer.

Anyway, I think that they could do OK on a model like Mini, by making one car and putting some effort in it instead of putting their brand on different crappy GM platforms.

by nanne (zwaerdenmaecker@gmail.com) on Fri Aug 21st, 2009 at 04:36:00 AM EST
[ Parent ]
To reach profitability SAAB must increase their volume to levels they didn't even reach before the recession. They haven't made a profit in twenty years. During the last twenty years thet have constantly been subsidised by GM, and before that by truck and arms sales.

In the car industry someone must be culled, and SAAB is a prime candidate.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Aug 21st, 2009 at 05:49:38 AM EST
[ Parent ]
The last 20 years coincide perfectly with the period of GM ownership and the resulting poor management decisions.

What Saab would need to do is look on the long term and start developing its own customised platform again instead of making somewhat fancier Opel Vectras and Insignias with poor finishing.

Besides, Saab doesn't have the capacity that needs to be cut. They only make 100,000 cars a year, and that's a target they could stick to, getting profitability by better pricing for cars with a higher standard.

by nanne (zwaerdenmaecker@gmail.com) on Fri Aug 21st, 2009 at 06:52:11 AM EST
[ Parent ]
The company didn't make money before GM either. It was supported by the truck and arms manufacturing which has since been spun off. The Wallenbergs couldn't be happier, they got to keep the family silver while dumping the autos on the unsuspecting Americans.

100.000 cars is not enough at the prices they take today. They need 150.000-200.000 and they won't get that. The alternative is raising prices, but there's no way anyone would choose a SAAB when they could get a Lexus, BMW or Mercedes for the same price. No way.

There is a huge global overcapacity and competition is razorsharp. The herd will be culled.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Aug 21st, 2009 at 02:46:38 PM EST
[ Parent ]
I see that there are several Carnegie banks in Scandinavia.  Are these related to or derived from the US Carnegie fortune?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Aug 21st, 2009 at 01:47:58 PM EST
[ Parent ]
I believe it is a different branch of the same, originally scottish family.

David Carnegie (entrepreneur) - Wikipedia, the free encyclopedia

David Carnegie, Sr. (8 February 1772, Montrose, Angus - 10 January 1837) was a Scottish entrepreneur who founded D. Carnegie & Co. in Sweden, today known as Carnegie Investment Bank.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri Aug 21st, 2009 at 04:28:40 PM EST
[ Parent ]
Uhmm, perhaps his family was a poor relation.  According to the Wiki bio his father borrowed money to emigrate to the Allegheny area.  Andrew was born about two years before the time David Carnegie, Sr. died.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Aug 21st, 2009 at 09:46:43 PM EST
[ Parent ]
Michael Hudson:
Why Iceland's move is so important for international financial restructuring

Iceland has decided that it was wrong to turn over its banking to a few domestic oligarchs without any real oversight or regulation, on the by-now discredited assumption that their self-dealing somehow will benefit the economy.

The amount of debt that can be paid is limited by the size of the economic surplus - corporate profits and personal income for the private sector, and the net fiscal revenue paid to the tax collector for the public sector. But for the past generation neither financial theory nor global practice has recognized any capacity-to-pay constraint. So debt service has been permitted to eat into capital formation and reduce living standards.
...
Instead of imposing the kind of austerity programs that devastated Third World countries from the 1970s to the 1990s and led them to avoid the IMF like a plague, the Althing is changing the rules of the financial system. It is subordinating Iceland's reimbursement of Britain and Holland to the ability of Iceland's economy to pay.

This weekend's pushback is a quantum leap that promises (or to creditors, threatens) to change the world's financial environment. For the first time since the 1920s the capacity-to-pay principle is being made the explicit legal basis for international debt service. The amount to be paid is to be limited to a specific proportion of the growth in Iceland's GDP (on the assumption that this can indeed be converted into export earnings).[...] This means that if creditors take punitive actions whose effect is to strangle Iceland's economy, they won't get paid.

Iceland promises to be merely the first sovereign nation to lead the pendulum swing away from an ostensibly "real economy" ideology of free markets to an awareness that in practice, this rhetoric turns out to be a junk economics favorable to banks and global creditors.
...
No doubt the post-Soviet countries are watching, along with Latin American, African and other sovereign debtors whose growth has been stunted by the predatory austerity programs that IMF, World Bank and EU neoliberals imposed in recent decades. The post-Bretton Woods era is over. We should all celebrate.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Aug 19th, 2009 at 08:50:43 AM EST
A good compromise between disastrous austerity and disastrous default methinks. And very, very interesting. Also gives creditors an incentive not to fuck around or plot revenge, which they are completely free to do in the event of default.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Aug 20th, 2009 at 03:02:41 PM EST
[ Parent ]
We might end up seeing prosecutions in Iceland, the UK or both...

[Torygraph Alert] Iceland: what ugly secrets are waiting to be exposed in the meltdown? (15 August 2009)

It has now become clear that this was no ordinary crash. Iceland's special investigation into "suspicions of criminal activity" at the three banks is likely to stretch from Reykjavik to London, Luxembourg and the British Virgin Islands.   Related Articles

Eva Joly, the French-Norwegian MEP and fraud expert hired by Iceland and now working with the [UK's] Serious Fraud Office, now believes it will be "the largest investigation in history of an economic and banking bank collapse".

Many of the banks' secrets are likely to be inextricably bound up with corporate Britain and the success of these investigations in tracing and recovering assets is likely to affect every UK household.



En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Aug 19th, 2009 at 09:12:42 AM EST
the success of these investigations in tracing and recovering assets is likely to affect every UK household.

And affect every financial corporation doing significant business in The City, which is likely the Torrygraph's main concern, as opposed to "every UK household."  And not just financial corporations in The City.  We may at least hope that this is the tread that leads to the unraveling of the veil of corporate secrecy for the financial corporations and agencies involved in this part of the GFC.  That in turn would lead to the possibility of recovery from the personal estates of directors, officers and board members.  Which is why a settlement is more likely.  

Hope Iceland holds out for recovery instead. Making much of this public would encourage others to follow the same path.  It would be sweet indeed to see Goldman buried under molten lava from an Icelandic erruption.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 19th, 2009 at 12:22:54 PM EST
[ Parent ]
More from the cited article:
But Dr Jon Danielsson, an Icelander who teaches economics at the London School of Economics, believes that while the timing of the crash was dictated by the global banking crisis, the scandal is unique among European financial institutions.

He believes the root of Iceland's problems that have now decimated its economy appear to have started when the government decided to privatise the banks in the early 1990s.

"Iceland got its regulations from the EU, which was basically sound," he says. "But the government had no understanding of the dangers of banks or how to supervise them. They got into the hands of people who took risks to the highest possible degree."


So the problem was just naive Icelandic government officials?  Just a few bad apples?  Nothing for the rest of you to worry about?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 19th, 2009 at 12:37:47 PM EST
[ Parent ]
I think actually that the problem is deeper rooted, and that there will have to be a second wave of the Icelandic revolution.

The nexus between the top echelons of business, executive and government appears to be so thoroughly incestuous and corrupt that this government will probably fall as well.

Probably it's only the Icelandic women who can be trusted to sort it out.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Aug 19th, 2009 at 03:41:09 PM EST
[ Parent ]
But the current government is supposed to be already about Icelandic women sorting it out... I don't understand...

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Aug 19th, 2009 at 04:47:25 PM EST
[ Parent ]
Just a few headline appointments, I think.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Thu Aug 20th, 2009 at 05:24:31 AM EST
[ Parent ]
European Tribune - Odious debts have odious debtors
There is a long-standing precedent for countries refusing to pay "odious" debts - debts that were run up by repressive, colonial or otherwise illegitimate regimes. Similarly, a case can be made that countries who have been saddled with unpayable levels of IMF credit should be able to jettison these liabilities.

If I understand correctly this was a principle that mostly was used by Latin American countries in the 19th century - and also by the US when "liberating" such countries. It has since fallen out of use though attempts has been made to resurrect the principle.

Does anyone know when it was last used succesfully?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Aug 19th, 2009 at 03:44:36 PM EST
I was doing a bit of research in 2004-5 on some Latin American topics, at which time there'd been a lot of talk about renewing the practice.  I seemed to recall that Ecuador was seriously considering it, so I just did a quick and dirty search.  I can't vouch for the blogs linked here, having never heard of them before, but it appears that it's an ongoing thing:

Sept, 2008:  President Rafael Correa declared on Friday that Ecuador would not make a $30.6 million interest payment on $510 million in bonds due in 2012, calling the debt illegal.

The default on the Global Bonus 2012 bonds means that Ecuador is also defaulting on Global 2015 and 2030 bonds. The default totals $9.937 billion, 19 percent of the country's GDP. Ecuador has assembled a legal team to fight expected lawsuits and hopes to use the default as leverage to renegotiate the debts.

(...)The Confederation of Ecuadorian Kichwas (ECUARUNARI), the powerful Andean branch of the country's indigenous peoples movement, has long called the foreign debt illegal and illegitimate. "We have not acquired any debt. The so-called public debt really belongs to the oligarchy. We the peoples have not acquired anything or been benefited, and thus we owe nothing."

And the numbers here startled me.  I remember reading about the proposal, but had no idea it had taken off.  If accurate, this seems significant.

Oct., 2007:  (...)An Alternative to Debt Slavery - The Bank of the South

Last December, Hugo Chavez announced his idea for a Banco del Sur, or Bank of the South, as part of his crusade against the institutions of international capital he calls "tools of Washington." The bank will be officially launched at a presidential November 3 summit in Caracas, where it is to be headquartered, with seven founding member-states - Venezuela, Argentina, Brazil, Uruguay, Paraguay, Bolivia and Ecuador.

On October 12, Colombia's President Alvaro Uribe announced his nation agreed to become the eighth member but said "The decision is not a rejection to the World Bank or Inter-American Development Bank, but a sign of solidarity and fraternity towards the South American community." At this time, only four South American states aren't included - Chile, Peru, Guyana and Surinam, but Chile seems likely to come aboard following Colombia's lead, and the others may decide to join them.

(...)In 2005, 80% of IMF's $81 billion loan portfolio was to Latin America. Today, it's 1% with nearly all its $17 billion in outstanding loans to Turkey and Pakistan. The World Bank is also being rejected.

Perhaps it bears further research (I don't have time today) -- has anyone here heard anything about this?

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Aug 19th, 2009 at 04:43:20 PM EST
[ Parent ]
Chris Cook has done some work on the Bank of the South. It's probably worth a diary.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Aug 19th, 2009 at 04:48:33 PM EST
[ Parent ]
I think I posted something about the Ecuadorian response to debts to Citi back in 2008.  Can't recall specifics, but it appeared that the issuance of those bonds on those terms may have involved serious misconduct by Citi and Ecuadorian officials in a previous administration.  This was the pattern during "The Latin American Debt Crisis" of the 1980s, which was really a crisis of US banks having loaned far more to Latin American countries than they could afford.

This was tied into the oil shocks, which vastly increased the revenue and wealth in oil exporting countries, but increased monetary flows out of oil importing countries.  The mid east producers, especially Saudi Arabia, were concerned to recycle the petrodollars so as to minimize dollar inflation, as oil is denominated in dollars.  This left some of the big US banks flush with money to profitably invest.

The US banks, in the finest tradition, saddled up Latin American nations with as much debt as they conceivably carry, often with significant inducements to local elites, the results of which were that the local elites were mostly concerned that the loans got made, for their "commissions", but not that the loan be profitably invested.  Much of the proceeds of the loans, aside from the "commissions" ended up being "privatized" by elites further down the feeding chain, and when the bloom came off the rose in the '80s, surprise! the debtors couldn't pay.

One description of this process can be found here.  My guess is that in many cases, Latin American governments made loan payments out of loan proceeds, until they ran out of proceeds, hopefully after they left office and the country for Switzerland or other more salubrious climes.


"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Aug 21st, 2009 at 02:13:08 PM EST
[ Parent ]
FT Letter: National equity turns the thinking about risk on its head

Sir, I was fascinated to read Michael Hudson's article "Iceland's debt repayment limits will spread" (August 17).

Nicholas Taleb, in these pages, and Willem Buiter, in his FT blog, have both recently made the point that if debt is unsustainable then equity is the only solution. Since sovereign debt is unrepayable, and this is as much the case (in fact more so) for US debt as any other nation, then why should not nation states recognise this reality and issue undated units of "national equity" by way of a debt/equity swap?

These undated units would be issued with a reasonable (say) 1.5 per cent to 2.5 per cent index-linked dividend in dollars - at least for as long as the dollar is the global reserve currency.

Units would be both freely tradable and redeemable by the issuer at any time, simply by buying them back, and the unit price would reflect the judgement of investors that the issuer is able to pay the dividend.

The methodology of national equity turns existing thinking about risk on its head. Everyone has an interest in a country agreeing an affordable dividend, since it will then be more likely that it will be paid, and the unit will therefore be less risky and more valuable.

Chris Cook,
Linlithgow, West Lothian, UK



"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Wed Aug 19th, 2009 at 05:01:03 PM EST


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