The default - a negative phenomenon economy

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Probably many people remember, and some even shudder to remember the consequences and effect phenomenon, which describes the short little word "default".This is not just understood many terms - a "monster" who "ate" the years created an economic system.That "thanks" to the 1998 default Russians and Ukrainians are fully aware of the degree of influence of the world economy to the home refrigerator.This phenomenon is identified with empty shelves, long queues and hopelessness empty promises of the government about the imminent change in the situation.

If we consider this concept as an economic term, the default - is the process of violation by the borrower's payment obligations to the lender.In addition, the word is identified with the inability to make payments on its debt obligations in time and fulfill other conditions of the credit loan, stated in the contract.

If we look deeper into the term, the default - it is any kind of failure to pay on the loans granted.It's safe to say that the concept is synonymous with the word "bankruptcy".In this application directly to the term "default" implies a narrow focus - refers to the government's refusal to pay its debts.

The origins of this concept are covered with a touch of historical antiquity.Another medieval European landowners and landlords refused to pay on its debt, thereby triggering a default.It is also characteristic of other parts of the world.For example, the economic processes that took place after the First World War.A country like the United Kingdom, and after it and France, together with Italy have refused to pay their debts to America, attributed to default.The US still tends to get the required amount from Germany, that one had to pay in accordance with the Treaty of Versailles.

end of the 20th century was marked by default in the developing countries - Sri Lanka, Venezuela, Angola, Brazil and others.The most painful for the population was the process that took place in Argentina.It was then, in 2001, together with a default of the country has undergone a change of several governments.The population was frightened by riots and looting.As already noted, Russia and Ukraine have also felt the effect of this phenomenon.

Accepted provide several types of default:

1. bank debts;

2. credit liabilities measured in the national currency;

3. borrowing cost is calculated in foreign currency.

worth noting that, like any other economic phenomenon default carries both negative and positive consequences.Thus, the negative results of this process is to reduce the financial rating, the absence of financial insurance, the minimum internal cash reserves, depreciation of the national currency, the decline in real incomes of citizens, cessation or strong decline in production, a sharp contraction of the banking sector and the lack of lending opportunities for private companies, the emergence ofa huge number of political issues, and others.

The positive aspects include reducing the cost of manufactured goods, access to a safe level of operation in all spheres of the state.In default conditions can not function so-called false economic schemes.In addition, the government has a real opportunity to reduce the amount of debt, sitting at the table of negotiations with the lender.

default of Greece or Cyprus, America or Mexico never goes unnoticed.Due to the presence of export-import relations all market participants, anyway related to the debtor, feel the effects of this phenomenon.