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 What will happen if national bankrupt

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Alexis Sanchez
post Jul 10 2015, 02:54 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?
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Just like Indonesia.
happyking4ever
post Jul 10 2015, 02:57 PM

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QUOTE(shereen82 @ Jul 9 2015, 04:14 PM)
anything we can do to save ourselves?
Yes, everyone can contribute if want to save ourselves. Three words:

Beli Malaysian Product.


Stop buying imported smartphone, TV set, computers etc etc. Don't go to Singapore casino. Don't have vacation overseas. But meanwhile keeps local economy running and export our products oversea. Achieve better trade balance.

If this seems too hard, there is another way. Go oversea and earning their money, but don't spend all of them there. Send excess money back home to Malaysia.



happyking4ever
post Jul 10 2015, 03:00 PM

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QUOTE(AVFAN @ Jul 9 2015, 08:41 PM)
the thinking is probably... no need to repay 320 bil euros ("see, i win, no need to pay, f them), celebrate "national pride".

problem is this will also mean:

.. no money even to print new new drachmas
.. pensions seized, old folks return to the farms
.. black markets, shortage of good, medicines, bread

i won't want to be there then.
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Not just pensions, government can set any laws to seize the money, even regular working folks savings in banks can be seized. Even when no money to seize, could always increase tax rate to force more future income to be paid to government.

nexona88
post Jul 10 2015, 04:17 PM

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QUOTE(iextra81 @ Jul 10 2015, 02:55 PM)
borrow money from IMF. Let IMF to control the country
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they can do better job? hmm.gif
wil-i-am
post Jul 10 2015, 05:24 PM

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Impossible as BN will hang on a cliff edge
razaliChe
post Jul 10 2015, 06:13 PM

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It is sic when the top brass forced us to accept their stories. It is like everything we learn at uni counts for nothing with these top brass insisting nothing is wrong and the country is on the right track.
TSshereen82
post Jul 13 2015, 03:52 PM

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QUOTE(happyking4ever @ Jul 10 2015, 02:57 PM)
Yes, everyone can contribute if want to save ourselves. Three words:

Beli Malaysian Product.
Stop buying imported smartphone, TV set, computers etc etc. Don't go to Singapore casino. Don't have vacation overseas. But meanwhile keeps local economy running and export our products oversea. Achieve better trade balance.

If this seems too hard, there is another way. Go oversea and earning their money, but don't spend all of them there. Send excess money back home to Malaysia.
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how can we export our products oversea to earn money? Our product price at oversea will be very very low. Why we cant buy imported product? Foreign countries import their products, Msia govn will charge them tax. And then we buy the imported product and pay tax to govn.
happyking4ever
post Jul 14 2015, 03:15 PM

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QUOTE(shereen82 @ Jul 13 2015, 03:52 PM)
how can we export our products oversea to earn money? Our product price at oversea will be very very low. Why we cant buy imported product? Foreign countries import their products, Msia govn will charge them tax. And then we buy the imported product and pay tax to govn.
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The more imported products you buy, the lower ringgit will go and soon you need 20k per month to eat nasi lemak.

TSshereen82
post Jul 15 2015, 01:54 PM

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QUOTE(happyking4ever @ Jul 14 2015, 03:15 PM)
The more imported products you buy, the lower ringgit will go and soon you need 20k per month to eat nasi lemak.
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Why? Do you mind explain?
irene_star982
post Jul 15 2015, 02:07 PM

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I wonder when negara bankrupt ....property price will come down or not???

Maybe that time only can afford to buy house.....

House price so expensive these days.... how to buy???

Archer17
post Jul 15 2015, 11:34 PM

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QUOTE(knwong @ Jul 9 2015, 08:05 PM)
They borrow from domestic banks, CPF, etc.

A country can always borrow >100%, stay healthy if they can service the debt payment with interest on time without defaulting. Japan for instance borrow >200% of their GDP

A country that borrow >50% of their GDP (like M'sia), but cannot service the debt will create chaos.
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u mean the country get loan from its country? rclxub.gif rclxub.gif
HitamHad
post Jul 16 2015, 12:14 PM

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Does it mean that it is safer for a country to avoid insolvency by borrowing from its citizens, local financial institutions, local institutional funds etc. with no repayment terms and then impose additional taxes on local taxpayers to get the money to service their interest payment only?

How long can this last if the borrowed funds are used to pay foreign creditors for loans, goods and services to run the government; instead of investing it in the local economy to generate the goods and services necessary for domestic and export sales; which is essential for economic growth?

Pax.
T231H
post Jul 16 2015, 12:21 PM

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QUOTE(HitamHad @ Jul 16 2015, 12:14 PM)
Does it mean that it is safer for a country to avoid insolvency by borrowing from its citizens, local financial institutions, local institutional funds etc. with no repayment terms and then impose additional taxes on local taxpayers to get the money to service their interest payment only?
found this on google...hope it can provide some answers...
How Japan Borrows $9 Trillion Practically for Free

http://www.bloomberg.com/news/articles/201...ically-for-free

How long can this last if the borrowed funds are used to pay foreign creditors for loans, goods and services to run the government; instead of investing it in the local economy to generate the goods and services necessary for domestic and export sales; which is essential for economic growth?
hmm.gif what if there are BIG "leakages" that goes into the generation of goods and services for domestic and export sales; which is essential for economic growth?

Pax.
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This post has been edited by T231H: Jul 16 2015, 12:21 PM
TSshereen82
post Jul 21 2015, 06:46 PM

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QUOTE(happyking4ever @ Jul 14 2015, 03:15 PM)
The more imported products you buy, the lower ringgit will go and soon you need 20k per month to eat nasi lemak.
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Are you there?? I replied you once before...



QUOTE(irene_star982 @ Jul 15 2015, 02:07 PM)
I wonder when negara bankrupt ....property price will come down or not???

Maybe that time only can afford to buy house.....

House price so expensive these days.... how to buy???
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I dun think so.. our currency will drops like hell..
METALRAGE
post Jul 22 2015, 12:01 AM

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QUOTE(irene_star982 @ Jul 15 2015, 02:07 PM)
I wonder when negara bankrupt ....property price will come down or not???

Maybe that time only can afford to buy house.....

House price so expensive these days.... how to buy???
*
This will likely happen only in a persistent deflationary environment.

In my limited knowledge, if a country defaults, it is more likely that hyper inflation would set in. However, a period of deflation could already have preceded the sovereign default event (sovereign defaults play out like a really slow train wreck).

It is important to see hyper-inflation / deflation as a separate event from a default. Whether the deflation prolongs or hyper inflation sets in depends on certain economic events and levers such as capital flight, capital controls, forex restrictions, currency valuations, ratio of local to foreign creditors etc. It is situational.

1) If a country goes bankrupt (technically, it is insolvent rather than bankrupt) AND the currency subsequently devalues to nothing, the country is likely to experience a period of hyper inflation (in local currency terms). This is the upward pressure created by the eroding value of currency compared to fixed assets. People would rather hold on to their hard assets than to hold on to RM. "Want me to sell you my house? only if you pay me 10x what it was yesterday la!"

2) In an insolvency, write downs and some destruction of money happens. What this means is that the total amount of money circulating in the country (for locally held debt) suddenly becomes less. When there's less money in circulation compared to an amount of goods that is constant, it creates a downward pressure on prices. If the Ringgit's value somehow can remain unscathed after default, this scenario could happen if a majority of govt debt was held locally.

3) Which scenario happens depends on the mix of measures taken by BNM (E.g. Print money, currency defense, capital controls, restrict access to forex) and also market reaction to the events playing out.

4) Finally, it could all still be irrelevant for house prices. Because the because people could insist on being paid in USD or some other stable currency, which makes bench marking against existing house prices obsolete.

I hope you gained something from my explanation. There really is alot of knowledge to compress into one reply.
TSshereen82
post Jul 22 2015, 10:50 PM

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QUOTE(METALRAGE @ Jul 22 2015, 12:01 AM)
This will likely happen only in a persistent deflationary environment.

In my limited knowledge, if a country defaults, it is more likely that hyper inflation would set in. However, a period of deflation could already have preceded the sovereign default event (sovereign defaults play out like a really slow train wreck).

It is important to see hyper-inflation / deflation as a separate event from a default. Whether the deflation prolongs or hyper inflation sets in depends on certain economic events and levers such as capital flight, capital controls, forex restrictions, currency valuations, ratio of local to foreign creditors etc. It is situational.

1) If a country goes bankrupt (technically, it is insolvent rather than bankrupt) AND the currency subsequently devalues to nothing, the country is likely to experience a period of hyper inflation (in local currency terms). This is the upward pressure created by the eroding value of currency compared to fixed assets. People would rather hold on to their hard assets than to hold on to RM. "Want me to sell you my house? only if you pay me 10x what it was yesterday la!"

2) In an insolvency, write downs and some destruction of money happens. What this means is that the total amount of money circulating in the country (for locally held debt) suddenly becomes less. When there's less money in circulation compared to an amount of goods that is constant, it creates a downward pressure on prices. If the Ringgit's value somehow can remain unscathed after default, this scenario could happen if a majority of govt debt was held locally.

3) Which scenario happens depends on the mix of measures taken by BNM (E.g. Print money, currency defense, capital controls, restrict access to forex) and also market reaction to the events playing out.

4) Finally, it could all still be irrelevant for house prices. Because the because people could insist on being paid in USD or some other stable currency, which makes bench marking against existing house prices obsolete.

I hope you gained something from my explanation. There really is alot of knowledge to compress into one reply.
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thanks for the reply.. hav gone through once.. but i will try to digest it better.. if our country defaults, other countries wont lead us a hand what? Since we hav lost our faith from them..
T231H
post Jul 22 2015, 10:53 PM

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QUOTE(shereen82 @ Jul 22 2015, 10:50 PM)
..... if our country defaults, other countries wont lead us a hand what? Since we hav lost our faith from them..
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hmm.gif Greece Defaulted a few times...yet still can borrow money?
TSshereen82
post Jul 22 2015, 10:59 PM

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QUOTE(T231H @ Jul 22 2015, 10:53 PM)
hmm.gif Greece Defaulted a few times...yet still can borrow money?
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Oh, really? I didnt really follow up their news.. I just know they default by last month (the latest one)
T231H
post Jul 22 2015, 11:05 PM

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QUOTE(shereen82 @ Jul 22 2015, 10:59 PM)
Oh, really? I didnt really follow up their news.. I just know they default by last month (the latest one)
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just found this on google...
Greece Has Been In Default For 50% Of Its Time As An Independent Country
http://www.forbes.com/sites/timworstall/20...endent-country/
http://www.investopedia.com/financial-edge...t-defaults.aspx
PACINO
post Jul 23 2015, 12:00 PM

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QUOTE(happyking4ever @ Jul 14 2015, 03:15 PM)
The more imported products you buy, the lower ringgit will go and soon you need 20k per month to eat nasi lemak.
*
sadly , he is correct in some ways. We need to up the level of domestic spending in local products , while managing the outflow of money. Somehow the money earned by the rich businessman needs to be plough back into our system , and not being carried away to another country.

Investing in overseas operations ( E.g - companies & banks ) needs to hire a lot of guys from Malaysia , to provide them with expat life there ( increase quality of life ) , and create job opportunities back in our homeland. Earn other people's money , channel back into our people. ( E.g. - What Samsung is doing - 1500 customer care jobs in Korea just for Samsung )

If we import less , and export more , we get a trade surplus , which in line will have correction to our currency , making it appreciate.
The end results we need to perform is : - Value creation , and controls of money outflowing.

You will also need to control the outflow of illegal money , E.g - Gambling , corruptions , Prostitutions , smuggling to ensure that these black money source are taxed , and reduced to the minimal.

Demand for these industries will always be there , and government needs to find a way to tax it , legalize it so that our people will be doing the job , and not letting other people coming into our country to earn our money and take it back to their homeland ( E.g - Chinese , Thai , Viets , Indons prostitutes ) etc.

So many ways , as you can see...if you manage to do it all , we can be strong.
Cheerios

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