sovereign bankruptcy a piece of ifa still missing marcus miller s comments
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‘Sovereign Bankruptcy: a piece of IFA still missing?’ Marcus Miller’s comments. Nice paper :elegant account of Ideal Bankruptcy Arrangements followed by a Brief History of actual practice… but maybe some bits are missing! I’ll briefly summarise key contributions…

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sovereign bankruptcy a piece of ifa still missing marcus miller s comments
‘Sovereign Bankruptcy: a piece of IFA still missing?’Marcus Miller’s comments
  • Nice paper :elegant account of Ideal Bankruptcy Arrangements followed by a Brief History of actual practice…
  • but maybe some bits are missing!
  • I’ll briefly summarise key contributions…
  • then mention points to consider in any revision for the volume.
a brief history of debt restructuring
A Brief History of Debt Restructuring
  • Low Income Countries
  • Convincing critique of the Paris-Club-plus- IMF-program approach: too little write- down, too late, and badly focussed.
  • Without a ‘fresh start’, debt postponement for insolvent countries is like helping a drowning person without pulling them out of the water – can lead to Slow Motion Submersion in debt!
what s missing
What’s missing?
  • In Brookings Papers (2002?) Jeffrey Sachs offered a nice model of endogenous growth to underline the need for a fresh start.
  • Like Ravi Kanbur, Jeff emphasized the need to focus on end results (e.g. MDGs) rather than on intermediate targets for fiscal and monetary policy.
  • Show how things have changed/improved since then-- with big write-downs and focus on MDGs under HIPC and MDRI
market access countries
Market Access Countries
  • Neat account of shift from Bank Loans to Bonds after the LA debt crisis of the 1980s.
  • ‘Drowning in debt’ analysis is used to suggest that the Baker plan mistook the situation as a Liquidity Crisis and led to more debt piling up until the Brady plan led to write down.
  • What about Merlo and Wilson idea that prompt write down would have destroyed the equity of NY Banks; so there was a strategic delay to allow the NY Banks to provision for write down?
the sdrm saga
The SDRM saga
  • Authors tell the tale how SDRM was dropped in favour of CACs
  • Do not discuss the Lesser Evil theory that SDRM was a credible threat…
  • to get IIF to sign up to CACS and codes – as they have done.
what about russia and argentina
What about Russia and Argentina?
  • “ Creditors are getting paid for the risk of default but the actual loss from defaults is significantly less than what is priced into the market.”
  • (We are told that Moody’s recovery proxy is wrong but the authors are too shy to give details of Shari Speigel’s alternative.)
  • But the Table provided excludes Russia and Argentina, the two hefty write downs. Why?
le defi porzecanki
Le defi Porzecanki
  • “Restructurings are close to NPV preserving , give breathing space but no fresh start”.
  • What is authors’ reply to Porzecanski’s challenge: that after Argentina the problem is not rogue creditor’s but rogue debtors?
  • Would it help to refer to the new political economy theory of sovereign debtpenalties? It is the take-up of of debt by locals that provides a credible punishment for default: local citizens who suffer can throw the government out of office!
  • Ref: IDB Living with Debt (-and dying with default!)
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