ECB and Inflation

[Agelastus]

Butting in tad rudely here, since I'm a non-American, but some browsing I did earlier would suggest that States can't legally/constitutionally go bankrupt, and that no state ever has.

http://www.csg.org/pubs/capitolideas/enews/issue65_3.aspx

"There are two reasons why state governments currently cannot use the federal bankruptcy system to reorganize their debt. First, the federal bankruptcy code does not allow—and has never allowed—state governments to declare bankruptcy. Since 1937, the bankruptcy code has allowed 'municipalities' to declare bankruptcy. The term 'municipality' is defined in the bankruptcy code as a 'political subdivision or public agency or instrumentality of a state.' This definition is broad enough to include cities, counties, townships, school districts and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities and gas authorities. But it does not include state governments.

"The second reason stems from the U.S. Constitution. The contracts clause of the U.S. Constitution prohibits state governments from 'impairing the obligation of contracts.' As originally understood and enforced, this clause prohibited state legislatures from passing any laws to relieve either private debt or the state government's own debt. Beginning in 1934, however, the Supreme Court began to interpret the contracts clause more flexibly and not as an absolute bar to state debt relief laws. Even under the flexible modern approach, however, the Supreme Court in 1977 reiterated that 'a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money (on something else.)' Thus, were Congress to amend the federal bankruptcy code to authorize states to repudiate debt, the Supreme Court would then need to decide the novel constitutional question of whether such debt repudiation would nonetheless violate the contracts clause of Article I, Section 10."

Also see below for municipal bankruptcies and defaults since 2010.

http://www.governing.com/gov-data/municipal-cities-counties-bankruptcies-and-defaults.html

[Admiral Yi]

http://www.nytimes.com/2011/01/23/weekinreview/23davey.html?_r=0

Call it what you will.  Arkansas didn't pay back what they said they would.

[grumbler]

http://www.nytimes.com/2011/01/23/weekinreview/23davey.html?_r=0

Call it what you will.  Arkansas didn't pay back what they said they would.

That's called a default.  It isn't bankruptcy.  Lots of sovereigns have defaulted.

[Agelastus]

That's not how this reads.

https://books.google.co.uk/books?id=C2RKp_VCshcC&pg=PA5&lpg=PA5&dq=Refunding+Act+arkansas+1933&source=bl&ots=a5cm--pbKM&sig=9Ni17J6dv8CLZHXT_8z-t2kCu8g&hl=en&sa=X&ei=LUw9VavyLtXvaMKcgagJ&ved=0CCcQ6AEwAQ#v=onepage&q=Refunding%20Act%20arkansas%201933&f=false

A temporary default, an extension of maturities in 1933 and a successful refunding in 1941 does not a bankruptcy make as far as I am aware.

Did the bondholders actually lose any money? Any of the principal, at least?

[Admiral Yi]

That's not how this reads.

https://books.google.co.uk/books?id=C2RKp_VCshcC&pg=PA5&lpg=PA5&dq=Refunding+Act+arkansas+1933&source=bl&ots=a5cm--pbKM&sig=9Ni17J6dv8CLZHXT_8z-t2kCu8g&hl=en&sa=X&ei=LUw9VavyLtXvaMKcgagJ&ved=0CCcQ6AEwAQ#v=onepage&q=Refunding%20Act%20arkansas%201933&f=false

A temporary default, an extension of maturities in 1933 and a successful refunding in 1941 does not a bankruptcy make as far as I am aware.

Did the bondholders actually lose any money? Any of the principal, at least?

As you already pointed out, bankruptcy was not an option.  However, a missed payment, a reduction of interest and an extension of maturity certainly meets my definition of sovereign default/restructuring.

[MadImmortalMan]

Basically any time you don't pay back what you borrowed under the terms of the original agreement. Whether that means you missed the deadline or the terms were changed or renegotiated or whatever. It's a default.

[grumbler]

As you already pointed out, bankruptcy was not an option.  However, a missed payment, a reduction of interest and an extension of maturity certainly meets my definition of sovereign default/restructuring.

So, are you still arguing that Arkansas declared bankruptcy, or not?

I asked Sheilbh about bankruptcy specifically because he called it bankruptcy.  I cannot see any advantage for a sovereign to declare bankruptcy, even if there is (as in the US) a higher-level sovereign with which they could file.  Bankruptcy allows a legal (or real) person to discharge its debts at less than face value, in return for losing some or all of its/his/her assets. 

I's an alternative to being sued for breach of contract.  A sovereign doesn't need that alternative, as the states can only be sued with their own permission.

[dps]

An oversimplification:

Default:  you don't make a specific payment you're supposed to make.

Bankruptcy:  you aren't going to make any of the payments you're supposed to make, and seek the protection of a court so your creditors don't take everything you have.

[grumbler]

An oversimplification:

Default:  you don't make a specific payment you're supposed to make.

Bankruptcy:  you aren't going to make any of the payments you're supposed to make, and seek the protection of a court so your creditors don't take everything you have.

Bankruptcy: You allow the court to make the payments on your behalf, dividing your assets as (nominally) fairly as possible among your creditors and forgiving the remaining debt.

[MadImmortalMan]

Yeah bankruptcy is a legal thing. There are various types, but it's all under state authority.

[Sheilbh]

Due to internal and external opposition, Renzi's made hus electoral reform a vote of confidence. Seeing a few people who think this is rather brave and war tying that he's overplaying his hand.

It'd certainly put Greece into perspective

[crazy canuck]

An oversimplification:

Default:  you don't make a specific payment you're supposed to make.

Bankruptcy:  you aren't going to make any of the payments you're supposed to make, and seek the protection of a court so your creditors don't take everything you have.

Bankruptcy: You allow the court to make the payments on your behalf, dividing your assets as (nominally) fairly as possible among your creditors and forgiving the remaining debt.

The Court doesn't make any payments.

[Zanza]

I.M.F. Says Accord Is Remote in Talks With Greece

PARIS — The International Monetary Fund has called its negotiating team in the Greek bailout talks back to Washington, a stark sign that Athens and its creditors are not close to reaching a deal.

While the I.M.F. said Thursday that it remained engaged in the talks, the frustration was palpable. Greece's main creditors expressed discontent this week at the state of the discussions and at statements by Greek officials at home, including Prime Minister Alexis Tsipras.

After recalling its team from Brussels, the I.M.F. said that "major differences remain" in the negotiations, adding that "we are well away from an agreement."

"The I.M.F. never leaves the table," a spokesman, Gerry Rice, said at a press briefing in Washington. "But the ball is very much in Greece's court right now."

The uncertainty over a deal ratchets up the pressure on Greece, which is quickly running out of money.

Unless a deal is reached soon, Greece may not be able to make debt payments to its creditors or meet other financial obligations.

Greece owes 1.6 billion euros ($1.8 billion) to the I.M.F. by the end of the month. But its creditors — the I.M.F., the European Central Bank and other eurozone countries — have refused to release €7.2 billion from Greece's international bailout program until they come to terms over economic reforms and spending cuts.

While the negotiations in Brussels have been at an impasse for months, the pace of the talks had increased in recent weeks. Greece and its creditors have worked on dueling proposals, and appeared to be making progress in certain areas.

But Greece continues to push back against creditors' demands, particularly around politically sensitive areas like pension cuts. Mr. Tsipras called the creditors' proposal "absurd."

Talks have continued.

Mr. Tsipras met with Chancellor Angela Merkel of Germany and President François Hollande of France on Wednesday night in Brussels. Afterward, a Greek government official said that the talks had been constructive and that the three had "agreed to intensify process of bridging differences."

The Greek prime minister and the president of the European Commission, Jean-Claude Juncker, met on Thursday. After the talks, Mr. Tsipras similarly spoke about the efforts to "bridge the differences that remain, especially in fiscal and funding issues."

"We are cooperating to reach an agreement that will ensure Greece can recover with social cohesion and sustainable debt," Mr. Tsipras said in a statement.

The I.M.F. and others, though, put a less optimistic view on the progress. The European Union president, Donald Tusk, bluntly took aim at Greece.

"We need decisions, not negotiations now," Mr. Tusk told reporters in Brussels on Thursday. "There is no more space for gambling; there is no more time for gambling. The day is coming, I am afraid, that someone says the game is over."

This seems to be a game of chicken where no one will dodge eventually. It's really silly how our politicians willfully steer towards a very dangerous situation here.

[Admiral Yi]

I don't agree with the chicken analogy.  It's more a contest between reality and fantasy.

[Crazy_Ivan80]

I.M.F. Says Accord Is Remote in Talks With Greece

PARIS — The International Monetary Fund has called its negotiating team in the Greek bailout talks back to Washington, a stark sign that Athens and its creditors are not close to reaching a deal.

While the I.M.F. said Thursday that it remained engaged in the talks, the frustration was palpable. Greece's main creditors expressed discontent this week at the state of the discussions and at statements by Greek officials at home, including Prime Minister Alexis Tsipras.

After recalling its team from Brussels, the I.M.F. said that "major differences remain" in the negotiations, adding that "we are well away from an agreement."

"The I.M.F. never leaves the table," a spokesman, Gerry Rice, said at a press briefing in Washington. "But the ball is very much in Greece's court right now."

The uncertainty over a deal ratchets up the pressure on Greece, which is quickly running out of money.

Unless a deal is reached soon, Greece may not be able to make debt payments to its creditors or meet other financial obligations.

Greece owes 1.6 billion euros ($1.8 billion) to the I.M.F. by the end of the month. But its creditors — the I.M.F., the European Central Bank and other eurozone countries — have refused to release €7.2 billion from Greece's international bailout program until they come to terms over economic reforms and spending cuts.

While the negotiations in Brussels have been at an impasse for months, the pace of the talks had increased in recent weeks. Greece and its creditors have worked on dueling proposals, and appeared to be making progress in certain areas.

But Greece continues to push back against creditors' demands, particularly around politically sensitive areas like pension cuts. Mr. Tsipras called the creditors' proposal "absurd."

Talks have continued.

Mr. Tsipras met with Chancellor Angela Merkel of Germany and President François Hollande of France on Wednesday night in Brussels. Afterward, a Greek government official said that the talks had been constructive and that the three had "agreed to intensify process of bridging differences."

The Greek prime minister and the president of the European Commission, Jean-Claude Juncker, met on Thursday. After the talks, Mr. Tsipras similarly spoke about the efforts to "bridge the differences that remain, especially in fiscal and funding issues."

"We are cooperating to reach an agreement that will ensure Greece can recover with social cohesion and sustainable debt," Mr. Tsipras said in a statement.

The I.M.F. and others, though, put a less optimistic view on the progress. The European Union president, Donald Tusk, bluntly took aim at Greece.

"We need decisions, not negotiations now," Mr. Tusk told reporters in Brussels on Thursday. "There is no more space for gambling; there is no more time for gambling. The day is coming, I am afraid, that someone says the game is over."

This seems to be a game of chicken where no one will dodge eventually. It's really silly how our politicians willfully steer towards a very dangerous situation here.

the greeks need to learn that the rest of europe will not pay for their happy-time