Re:Puerto Rico files for biggest ever U.S. local government ...
by vkou on Wednesday May 03, 2017 @06:32PM
(#14260814)
Defaulting worked pretty well for Iceland. It worked poorly for Brazil and Argentina.
Not defaulting worked extremely poorly for Greece.
It all depends on the particular circumstances of a country. If you're going to be building massive amounts of infrastructure, then yeah, you may want to consider not defaulting. On the other hand, if the foundations of your economy are sound, you may do well to default, and live with the credit rating hit.
Re:Puerto Rico files for biggest ever U.S. local government ...
by throwaway2048 on Thursday May 04, 2017 @01:23AM
(#14262624)
No defaulting and instead trying to rough it out and pay off a crippling debt is massively more harmful for a country. Because they have to basically cut all services and investments into the economy, which causes GDP to contract heavily, which causes a huge decrease in taxes, which causes yet more cuts in government investment.
You get a Greece like deflationary spiral that basically totally destroys your economy, and any hope you ever had of paying off the debt.
Bring on the defaults.
Brazil is once again facing mounting debt due continuous budget deficit. This time the govt is pushing for austerity reforms that, if not approved, will lead once again to default. The govt approved ratings are abismal and populist candidates are expected to win next year's general election.
So, defaulting sucks.