they took the axe to my property today...

[Alinestra Covelia]

Nevermind - the conversation has progressed way beyond the small point I was going to make.

[Darius871]

Just OOC, to anybody who might know, what precisely happens when a sovereign country defaults on its own treasury's debts? I keep hearing people talking about states or the U.S. going "bankrupt" but that's misleading since it's a legal term, and obviously the U.S. can't realistically file for bankruptcy in its own federal courts, nor could many of its assets realistically be liquidated (well, maybe you could sell some bombers, the White House, etc...). Similarly I presume creditors can't realistically sue the U.S. in its own federal courts, and judgments from foreign courts would be difficult to enforce against a sovereign country, aside from attaching whatever tangible and intangible assets it was stupid enough to leave overseas. Or would its citizens be as personally liable as their government? Not likely.

So what happens? Do lenders just stop investing in the defaulting country's T-bonds (per credit reporting agencies) and otherwise simply cut their losses? That doesn't sound too bad. I suppose Iceland would be instructive but it's too early to tell just where that's headed.

I think you're right on the money; foreign nations seize assets they can get their hands on (see Britain re: Iceland), and otherwise the bond holders are just ****ed. If it's a nation that has substantial ties to another nation in terms of resources (say, Ukraine to Russia re: natural gas), that other nation might hold its resource hostage until its citizens are paid off; so perhaps Saudi citizens are safe buying US bonds...

Though OTOH the resource countries ought to know that withholding would almost totally kill the debtor's ability to make at least partial payments, much like how a bank might be more satisfied with 70% monthly payments than taking a debtor's truck and ensuring 0% because he can't get to construction jobs. I guess whatever best mitigates losses goes.

In any case, I don't see it ever being a real threat to sovereignty. So what if Uncle Sam doesn't get any more loans (except at absurd interest rates)? So we pass a balanced budget amendment and quit pissing away money we don't have. The tens of millions who are totally dependent on entitlements would be ****ed, as would most government employees, and eventually riots would have to be mowed down with real bullets, but at least sovereignty would survive.

[Zkribbler]

Similarly I presume creditors can't realistically sue the U.S. in its own federal courts, and judgments from foreign courts would be difficult to enforce against a sovereign country, aside from attaching whatever tangible and intangible assets it was stupid enough to leave overseas. Or would its citizens be as personally liable as their government? Not likely.

So what happens? Do lenders just stop investing in the defaulting country's T-bonds (per credit reporting agencies) and otherwise simply cut their losses? That doesn't sound too bad. I suppose Iceland would be instructive but it's too early to tell just where that's headed.

IIRC, Argentina defaulted on its bonds [several years/a few decades] ago. The result is a marked decrease of purchasers of its bonds.

[Darius871]

IIRC, Argentina defaulted on its bonds [several years/a few decades] ago. The result is a marked decrease of purchasers of its bonds.

So what's the upshot as far as social services go? Did/do they just slash it all with no options, inflate the currency, or some combination of both?

[notyoueither]

Their economy went to hell. The middleclass were impoverished, and the poor ate dirt as savings and investments were wiped out, or something like that.

It was decidedly unpleasant for just about everyone. Maybe Barnabas will drop by and give you some more accurate details. Or Drake will tell you how it really was.

[Darius871]

Well a huge degree of human misery I'm already taking as a given. What confuses me is how some semblance of ordered society even continues to function in those circumstances. I'd think anytime an entire country is basically written off for lending purposes, that'd be the recipe for instant commie revolution. But maybe the starved just don't have the energy for it.

[notyoueither]

I think the worst part would be the hyper inflation as nobody who owns anything of value would want to settle for normal amounts of your worthless currency in exchange for something of actual value.

I could be wrong, but I think that's what happens when nobody has any faith in your treasury or currency.

Additionally, suppliers of raw materials or other imports would demand payment in a currency other than yours. That would help fuel the inflation as your currency sinks like yesterdays toilet paper at the sewage treatment plant.

[notyoueither]

Well a huge degree of human misery I'm already taking as a given. What confuses me is how some semblance of ordered society even continues to function in those circumstances. I'd think anytime an entire country is basically written off for lending purposes, that'd be the recipe for instant commie revolution. But maybe the starved just don't have the energy for it.

That's what the military is for.

[Darius871]

That's what the military is for.

Ah. The U.S. is in good hands then.

(Except for that whole posse comitatus thingy but it's easy to repeal, as would be the entire Constitution in the right circumstances.)

[Kuciwalker]

Just OOC, to anybody who might know, what precisely happens when a sovereign country defaults on its own treasury's debts? I keep hearing people talking about states or the U.S. going "bankrupt" but that's misleading since it's a legal term, and obviously the U.S. can't realistically file for bankruptcy in its own federal courts, nor could many of its assets realistically be liquidated (well, maybe you could sell some bombers, the White House, etc...). Similarly I presume creditors can't realistically sue the U.S. in its own federal courts, and judgments from foreign courts would be difficult to enforce against a sovereign country, aside from attaching whatever tangible and intangible assets it was stupid enough to leave overseas. Or would its citizens be as personally liable as their government? Not likely.

So what happens? Do lenders just stop investing in the defaulting country's T-bonds (per credit reporting agencies) and otherwise simply cut their losses? That doesn't sound too bad. I suppose Iceland would be instructive but it's too early to tell just where that's headed.

IIRC it used to be that usually got you invaded - if you weren't a major power.

[notyoueither]

Ah. The U.S. is in good hands then.

(Except for that whole posse comitatus thingy but it's easy to repeal, as would be the entire Constitution in the right circumstances.)

Your National Guard could conquer most countries on the planet. They've also been receiving a lot of training in policing hostile populations of late.