good counclusion i like it

educated and experienced people with a lot of common sense who understand “our” plight.

The writer who said that “Default for a sovereign

should be very hard. It should be difficult and painful. It should cause a county’s populace to reject the defaulting government by vote or

rebellion.” is quite right – and Iceland did just that.

The new government now has the appalling task of trying to keep vultures at bay,

resisting bullying from hypocritical governments, attracting some kind of foreign assistance and rescuing its many ordinary citizens who have been

betrayed into bankruptcy by what they thought was conventional financial expertise and advice. Those who did the betraying are still at large and

some are even still in positions where they can continue their betraying. International justice, or even international common sense seem to be in

amazingly short supply, but your comments show that they do exist.

The debtor always chooses the legal venue for

the resolution of disputes and the framework. The borrower decides on the venue, and the lender either chooses to accept it or declines to lend.

The debtor also chooses the framework for the resolution of disputes in the terms and conditions which it offers to lenders. Again, lenders can

either choose to accept these or decline to lend.

Because the courts of New York and London provide precedence, intelligence and

honestly, debtors have generally been forced to choose those venues or to refrain from borrowing. They represent the international legal framework

to resolve disputes, and their honesty is the most important factor in that choice. No lender wants to rely upon the judicial systems of Argentina,

Ecuador or the Congo.

Lenders also do not want to depend on a politically staffed and politically motivated supra-

governmental debt resolution agency. A decade ago, in response to an earlier lending crisis, Anne Krueger of the IMF proposed that an international

body be established to oversee sovereign restructurings, as you have suggested. The idea has gained very little traction as lenders have very

little leverage on defaulting sovereigns as it is now. The thrust of her idea was that creditors should be reigned in and their rights diminished

so that the sovereign borrower can return to health with as little pain as possible. The closing paragraph of her 2001 speech reads; “The political

imponderable is whether our members are prepared to constrain the ability of their citizens to pursue foreign governments through their national

courts as an investment in a stable – and therefore more prosperous – world economy.” There are many “investments” that one might make for a better

world. An involuntary write down on a loan, to the benefit of another county’s politicians and citizens, is not one of them.

I am

retired. One of my children asked if I missed working. I told them that dividing profits was fun, allocating losses was hard. My business was in

the allocation of losses.I was not unhappy to be retired.

Default for a sovereign should be very hard. It should be difficult and

painful. It should cause a county’s populace to reject the defaulting government by vote or rebellion. It should strip those responsible of their

money and their liberty.

I know little of Iceland. What I do know suggests to me that they should formally default, clean their books

and go forward. Lenders have short memories. With a few exceptions they appear to be a fine, upstanding and hardworking people who have been badly

served by their politicians. I would hope that their cleansing process would include massive fines and imprisonment for those responsible for the

terrible pain that has been caused.

Has anyone in Iceland paid a price except for the common man?

If my reading of the

Iceland situation is correct, the politicians in England and the Netherlands made Icesave depositors whole when there was no legal obligation to do

so. Accordingly, they bought votes from those they made whole, promoted moral hazard, and subrogated their governments to the depositors claims. As

was said of taxation, and as you have pointed out; “A burden crushing to the few, is lightly born by the many.” Let England and the Netherlands

negotiate an appropriate payment from Iceland and the world will go on.

As to Greece, why does the government permit an underground

economy of 30% Why is it unable to tax and spend on a reasonable basis?
Why is it dependent upon the kindness of strangers – not short term, but

long term. You are railing about Greece’s liquidity problem when it is a solvency problem that has just manifested itself. “How did you go broke?

Slowly. then all at once.”- that is how confidence works – that is how the market works.

Sorry for the screed.

ending happily for once, it appears.

Will be up on BBC i-player tomorrow, no doubt.

http://www.gregpalast.com/liberian-leader-urges-

mps-to-back-action-against-vulture-funds/#more-3319

should not be honoured.

I am simply arguing that in the absence of an international legal framework to resolve disputes between debtors and

creditors – recognising that it takes two to tango – the resolution is often chaotic, unfair and disorderly.

Hundreds of companies and many

thousands of individuals default on their debts every day – for good reasons and bad. However the law intervenes to enforce payment, and protect

the creditor, or allow the debtor to default, and protect the debtor from creditors.

Bankruptcy law is one of the most civilised of our

legal institutions – and distinguishes our societies from those Dickensian conditions when people were put in prison for not paying their debts.

In the absence of such a legal framework, vultures will prevail.

that your views are off-the-mark, but, as an economist of great repute and influence, you may redeem yourself and aid the world.
For too

long, lending agreements have been chock-a-block with legal mumbo jumbo and rigmarole that are impediments to the smooth functioning of

governmental bodies throughout the world. You, and other leading economists, should campaign the United Nations, the World Bank, the IMF and the

BIS to do away the folderal of these instruments. In the future, all governmental contracts should contain plain and simple language to the effect

that “THIS AGREEMENT IS NOT A CONTRACT AND IS UNENFORCEABLE. IF THE BORROWER WISHES TO PAY MONIES TO THE LENDER, IT WILL. IF THE BORROWER DOES NOT

WISH TO PAY MONIES TO THE LENDER, IT WILL NOT. UNDER NO CIRCUMSTANCE WILL THE LENDER HAVE ANY LEGAL RIGHT TO THE PAYMENT OF INTEREST OR PRINCIPAL.”

Plain anguage such as this will completely eliminate the disgusting, distressing and socially unjustifiable problems occasioned by vulture

activity. I am sure that governmental bodies throughout the world will embrace this plan for openness and transparency.
In the meantime,

however, lenders should heed the First Law of Argentinian finance, “A dollar borrowed, is a dollar earned.”

taxpaying citizens who banked offshore with Kaupthing have been left high and dry. Roughly 10,000 British citizens have been left high and dry by

the UK government who take no responsibility although they had considerable input into the IoM’s financial workings.

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