On Wed, 25 Mar 2015 16:20:55 -0500, dpb
wrote:

snip
The problem isn't per capita, it's whether there's sufficient GDP to be
able to service it or not.

There's a reason the PIGS are the one dragging down the world system
every time they near default.
/snip

IMNSHO the problem goes far deeper than a few unfortunate
and/or venal countries, but rather is a systemic problem of
the new integrated *DEBT BASED* global socioeconomy.

There are two sides to this immediate SYMPTOM of imminent
default. The borrowers who are overextended, and the
lenders (many of whom are also overextended, e. g. carry
trade http://tinyurl.com/q522zan ) who enabled them to
become overextended.

AFAIK none of the sovereign loans were made at the
figurative point of a gun from the lenders perspective, but
much of the sovereign debt, from the borrowers perspective
were contracted as the result of “an offer they can not
refuse.” For example “rolling over” a maturing bond at
higher interest rates and worse terms, or to finance a
development which “will pay for itself.”

It is also well to remember that only in rare cases have the
western nations lent to other nations. Rather this involved
non-governmental companies and individuals lending to
nominally sovereign governments. In many cases this was the
large international banks such as Citi, who syndicated or
underwrote the loan for a very significant fee, and then
“retailed” the resulting bonds to individuals, pension
funds, etc. In the case of Argentina details are available
in a C-SPAN video about an hour long, which details how this
worked. It is well worth watching if you are interested in
the possibility of default.
http://www.c-span.org/video/?185857-...y-kept-rolling

In scanning the available information, it appears much of
the sovereign debt in risk of default was borrowed by
illegitimate governments (e. g. Argentina and Iraq), and/or
was borrowed without following the constitutional
requirements of the borrowing country such as legislative
ratification or plebiscite, e. g. Ecuador. Additional much
of the money received seems to have been diverted to
individual profit and not used for the “common good,”
resulting in “odious debt,” which is not collectable from
the nation. http://tinyurl.com/y59eet Many of the
developmental projects seem to have involved very
substantial “hidden commissions” or bribes to the officials
overseeing the developmental project, e. g. the Greek
subway, or to the military to purchase unneeded weapons, e.
g. 6 German submarines and numbers of advanced fighters for
Greece.

FWIW: The “Default Problem” did not occur overnight, but
has been a long-term development, which can be plausibly
dated from the Vietnam war, the cost of which introduced
the international debt based economy by the flood of
American dollars generated [this continues via QE and ZIRP].
This debt-based global economy continues to expand, but has
now reached its limits in that it is global and can expand
no more because there are no more *PLAUSIBLE* [Tinkerbell?]
borrowers. To be sure there are many nations such as
Somalia, Haiti, and Liberia that would like to participate,
but a “fig leaf” of debt repayment must exist for the game
to continue.

The task now is not to whine and complain, but rather to
limit the damage, clean up the mess, and make (and
implement) rational, data driven, plans to replace the
current system with something more sustainable, stable, and
equitable.


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"