In 1998, the Russian vocabulary, a new and terrible word default.What is it - really know a few, but that nothing good from a default should not wait known to all.And there is a word from the English default and it means non-compliance.Or rather, it is when the debtor refuses to pay its debt or interest thereon.
Actually, there are three options for default.And the one that happened 14 years ago, belongs to the first of them, state or sovereign default.This event is thoroughly shocked Russia and led to a severe economic crisis.And there are several reasons that led to that of the Russian Federation.And the main reason was the populist economic policy of Russia, as well as the whole pyramid of state short-term obligations (GKO).By the time the Russian managed to amass a huge public debt, which has been generated by the collapse of the economies of Asia.The liquidity crisis and the fall in world commodity prices, which was the basis of Russia's exports, too, was the reason that the Russians on the "hard way" learned what default.
consequences of the crisis significantly changed the development of the economy and the country as a whole.Strong ruble fell.If defaulting to the dollar gave 6 rubles, half a year, this ratio has amounted to 21 rubles per dollar.And that led to a loss of public confidence in the country, and foreign investors to the state itself, the Russian banking system and, of course, the national currency.What is defaulted to understanding the many small businesses and small banks.They do not withstand such shocks and "safely" ruined.Yes, and the entire banking system of the country for another six months was in collapse.
But most of all from this state in the country ordinary citizens suffer.What is the default for the usual hard workers?This is primarily the loss of all labor savings.But this is only half the problem.As a result of the crisis, many companies have gone bankrupt, in which these people worked.And those that are not closed, it is still stopped paying the workers salaries.People had to look for any opportunity to earn money just to survive.After all, the prices of essential commodities have increased along with the growth of the dollar, that is 3-4 times.And that, consequently, contributed to an increase in crime.
Then, in 1998, Russia had three opportunities for the come out of the crisis.You could print more rubles and plunge the country into another round of inflation.But the hyperinflation of the early 90s had not yet forgotten, and so the government decided not to take this step.You could also opt to pay foreign debts.But this option was considered unacceptable.Therefore, we choose a third scenario for overcoming the crisis, and the government refused to pay the domestic debt (T-bills).And then what is the default learned the Russians themselves.
In the entire history of the world economy was a lot of government defaults.And the classic example of this is the story that happened to Edward III - King of England.He was in 1327 refused to pay the debts of its predecessor, which has seriously owed by the Italian bankers.And in 1650, Oliver Cromwell hard to find money for the conquest of Ireland.And then he got into debt to the London-rich, as well as to many Protestants from all over Europe.After the victory, he promised to pay them, and the officers and soldiers of the army Irish soil.But these lands, of course, not enough at all.And while foreign investors Cromwell learned that such a default.He simply "forgot" to pay with them.
Also, the concept of a default is applied not only on a national scale.For example, corporate defaults - bankruptcy is a private company.A private default - this is when the borrower has a private refuses or is unable to repay its debts to the creditor.Also, all kinds of defaults can be divided into two classes.This is the actual default, then there is a complete failure of the borrower to pay their debts to any specific time or in the future, in other words, a real bankruptcy.And what is a technical default?This scenario is when the lender still has a chance to get their money.That is, the borrower is unable to repay the debt on time, but after some time he will be able to fulfill all terms of lending.
