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 What will happen if national bankrupt

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TSshereen82
post Jul 8 2015, 02:59 PM, updated 9y ago

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Can someone explain it in a layman term? As Im have not financial background

I found out that before Greece has collapse, Iceland (if im not mistaken) was collapsed few years ago and the amount of debt is double or triple of Greece

So what will happen if Msia (touchwood) have gone bankrupt?
T231H
post Jul 8 2015, 03:24 PM

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QUOTE(shereen82 @ Jul 8 2015, 02:59 PM)
Can someone explain it in a layman term? As Im have not financial background

I found out that before Greece has collapse, Iceland (if im not mistaken) was collapsed few years ago and the amount of debt is double or triple of Greece

So what will happen if Msia (touchwood) have gone bankrupt?
*
When a country fails to pay its creditors on time, it is said to go into “default”, the national equivalent of going bankrupt. But sovereign defaults are quite different from business bankruptcies as it is far harder for creditors to repossess the assets of a sovereign entity than to repossess the assets of a company .
.....Critically, there is no international law or court for settling sovereign defaults, which helps explain why they are so varied in length and severity.
http://www.economist.com/blogs/economist-e...ist-explains-20
http://www.businessinsider.com/what-happen...pt-2011-9?IR=T&
cherroy
post Jul 8 2015, 03:49 PM

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QUOTE(T231H @ Jul 8 2015, 03:24 PM)
When a country fails to pay its creditors on time, it is said to go into “default”, the national equivalent of going bankrupt. But sovereign defaults are quite different from business bankruptcies as it is far harder for creditors to repossess the assets of a sovereign entity than to repossess the assets of a company .
.....Critically, there is no international law or court for settling sovereign defaults, which helps explain why they are so varied in length and severity.
http://www.economist.com/blogs/economist-e...ist-explains-20
http://www.businessinsider.com/what-happen...pt-2011-9?IR=T&
*
Not harder, but no way should be the word.

You cannot foreclose or confiscate the country asset/land, even they own you trillion.

There is no such thing of a country "bankrupt".
Country only can default their loan commitment, by then creditor may lose trust on the country and the country may not able or find it difficult to refinance or borrow again.
cherroy
post Jul 8 2015, 03:53 PM

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QUOTE(shereen82 @ Jul 8 2015, 02:59 PM)
Can someone explain it in a layman term? As Im have not financial background

I found out that before Greece has collapse, Iceland (if im not mistaken) was collapsed few years ago and the amount of debt is double or triple of Greece

So what will happen if Msia (touchwood) have gone bankrupt?
*
There is no such thing a country "bankrupt", only got defaulting their borrowing commitment.

Consequence of defaulting by a country
1. Currency plunge
2. Economy recession due to FDI not dare to come
3. Short of liquidity in banking system
4. Bond yield rise, hence borrowing cost expensive, that could lead to economy problem.
5. Due to economy recession and liquidity problem and rise in borrowing cost, bank NPL may rise which may stress the banking system.
Lyu
post Jul 8 2015, 04:34 PM

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All the money in KWSP will be used to pay loan.
Malaysian will get poorer.
Criminal rates will increased.
The end

AVFAN
post Jul 8 2015, 04:40 PM

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QUOTE(Lyu @ Jul 8 2015, 04:34 PM)
All the money in KWSP will be used to pay loan.
Malaysian will get poorer.
Criminal rates will increased.
The end
*
pensions seized to pay loans happened in argentina 2008 and russia 2014:
http://blogs.telegraph.co.uk/finance/ambro...ebts_Whos_next/
http://www.bloomberg.com/bw/articles/2014-...the-u-dot-s-dot

plus...

goods shortage
black market

MeToo
post Jul 8 2015, 04:43 PM

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For a good case study...

Go take a look at Argentina in 2002. THey are similar to us, oil producing, agriculture power house, massively corrupt govt, etc

This post has been edited by MeToo: Jul 8 2015, 04:51 PM
SUSPink Spider
post Jul 8 2015, 06:10 PM

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Wage war and confiscate its oil wells? laugh.gif

Eh, sounds so familiar... brows.gif whistling.gif

This post has been edited by Pink Spider: Jul 8 2015, 06:10 PM
SUSthe99percent1
post Jul 8 2015, 06:20 PM

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Certain things will happen.

Weak Ringgit leading to a hyper-inflation scenario. Basically worthless to hold as Bank Negara will have to print more Ringgit to service the interest on debt repayments.

Interest rates hike, as government struggles to repay debt, so you pay.

Imports become too expensive. Exports will make a killing as holding other currencies that is stable.

Not much else other than that. Alot of austerity and suffering towards the people, it's already happening for ordinary citizens. If you can bare with it, you live with it. Other than that, life will go on.

FYI, Greece defaulting and leaving the Eurozone is actually a good thing for it's citizens. Bad for the Eurozone, as it will cause a drop in confidence and most likely, others will follow Greece and exit out of it.

To me, the Euro is a failed experiment at creating a world-wide currency.
MGM
post Jul 8 2015, 07:19 PM

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QUOTE(AVFAN @ Jul 8 2015, 04:40 PM)
pensions seized to pay loans happened in argentina 2008 and russia 2014:
http://blogs.telegraph.co.uk/finance/ambro...ebts_Whos_next/
http://www.bloomberg.com/bw/articles/2014-...the-u-dot-s-dot

plus...

goods shortage
black market
*
This is scary, better stop contributing extras into EPF account. And invest in Gold?

This post has been edited by MGM: Jul 8 2015, 07:20 PM
Baohulu55
post Jul 8 2015, 07:20 PM

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after defaulting, it means that the country no longer have to pay back the debt?
AVFAN
post Jul 8 2015, 07:53 PM

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QUOTE(MGM @ Jul 8 2015, 07:19 PM)
This is scary, better stop contributing extras into EPF account. And invest in Gold?
*
that, u think n decide... else u get charged for treason/sedition these days... very sensitive, u know. tongue.gif

there are choices... good news is many threads for many methods, good reads...

decision is individual...


Zanmai0146
post Jul 8 2015, 09:56 PM

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QUOTE(Baohulu55 @ Jul 8 2015, 07:20 PM)
after defaulting, it means that the country no longer have to pay back the debt?
*
But then your economy, tax almost everything is not under control by government. The creditors have the full control of it.

Creditor say;

- GST 20%, u must pay
- car tax 1000%, u must pay
- oil price tax 10%, u must pay etc etc
Baohulu55
post Jul 8 2015, 10:49 PM

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QUOTE(Zanmai0146 @ Jul 8 2015, 09:56 PM)
But then your economy, tax almost everything is not under control by government. The creditors have the full control of it.

Creditor say;

- GST 20%, u must pay
- car tax 1000%, u must pay
- oil price tax 10%, u must pay etc etc
*
but we aren't going to sell off our assets to the creditors, then how come those creditors are able to intervene our economy policies?
Zanmai0146
post Jul 8 2015, 11:10 PM

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QUOTE(Baohulu55 @ Jul 8 2015, 10:49 PM)
but we aren't going to sell off our assets to the creditors, then how come those creditors are able to intervene our economy policies?
*
I mean "if" but our case ain't same with Greece. Hopefully our next PM can do something on this.
SUScute_miao
post Jul 9 2015, 06:10 AM

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U will see ppl selling rm notes in pasar malam
cherroy
post Jul 9 2015, 07:57 AM

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QUOTE(Zanmai0146 @ Jul 8 2015, 09:56 PM)
But then your economy, tax almost everything is not under control by government. The creditors have the full control of it.

Creditor say;

- GST 20%, u must pay
- car tax 1000%, u must pay
- oil price tax 10%, u must pay etc etc
*
Creditor has not say to other country policy, unless the country still need to negotiate with the creditor for further financing to keep the country budget afloat.

Just like how Greece can vote "no" in the referendum in accepting term set by IMF/EU.
cherroy
post Jul 9 2015, 08:00 AM

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QUOTE(Baohulu55 @ Jul 8 2015, 10:49 PM)
but we aren't going to sell off our assets to the creditors, then how come those creditors are able to intervene our economy policies?
*
Creditor won't able to intervene your economy policy, but if the country is in defaulting stage, it just means the country facing financial problem and may need international aid for funding.

Want international aid? Then the creditor may lay down some term so that you show some effort to get the budget right so that you can repay the borrowing in the future.
Nobody want to borrow money to someone who show no effort to repay in the future.
mharmdone
post Jul 9 2015, 08:01 AM

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Become like Greece
forever1979
post Jul 9 2015, 10:03 AM

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seriously, I think we still *'safe' to reach the situation like Greece.

* Reason is I know just too many Malaysians here are super rich and most banks are healthy in term of bank loan status ...

But again, our economic conditions is getting worse and if those IMDB and corruption problem continue to persist/worsen, all the reserve will be gone one day...

just my opinion.



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