Kim Oosterlinck
- Published in print:
- 2016
- Published Online:
- January 2017
- ISBN:
- 9780300190915
- eISBN:
- 9780300220933
- Item type:
- book
- Publisher:
- Yale University Press
- DOI:
- 10.12987/yale/9780300190915.001.0001
- Subject:
- Biology, Ecology
This is a book about hope and international finance. The repudiation of Russia’s debt by the Bolsheviks in 1918 affected French investors for several generations. The reason for this was the sheer ...
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This is a book about hope and international finance. The repudiation of Russia’s debt by the Bolsheviks in 1918 affected French investors for several generations. The reason for this was the sheer volume of money lent by institutional investors and private citizens alike. This book focuses on the reasons which prompted French investors to hope they would eventually be repaid. In this financial context, hope was reflected in the fluctuations of Russian bond prices. Indeed, in view of the extreme nature of the repudiation, the prices of Russian sovereign debt experienced only a modest decline. As a matter of fact, they actually increased after the repudiation, and their yields were well below those observed nowadays when sovereign debts are repudiated. Far from being a sign of irrational behaviour, this trend can be attributed to expectations that one or more extreme events could occur. Governments have four key incentives to repay their debts: fear of a loss of reputation and consequent exclusion from capital markets; fear of armed intervention; trade sanctions; and seizure of collateral. In the Russian case, investors remained hopeful for the aforementioned reasons but they also hoped that a third-party government would stand in for the Russian government and fulfil its obligations. This book assesses the relative weight of each of these reasons to hope and shows why investors refused to view their repudiated bonds as valueless.Less
This is a book about hope and international finance. The repudiation of Russia’s debt by the Bolsheviks in 1918 affected French investors for several generations. The reason for this was the sheer volume of money lent by institutional investors and private citizens alike. This book focuses on the reasons which prompted French investors to hope they would eventually be repaid. In this financial context, hope was reflected in the fluctuations of Russian bond prices. Indeed, in view of the extreme nature of the repudiation, the prices of Russian sovereign debt experienced only a modest decline. As a matter of fact, they actually increased after the repudiation, and their yields were well below those observed nowadays when sovereign debts are repudiated. Far from being a sign of irrational behaviour, this trend can be attributed to expectations that one or more extreme events could occur. Governments have four key incentives to repay their debts: fear of a loss of reputation and consequent exclusion from capital markets; fear of armed intervention; trade sanctions; and seizure of collateral. In the Russian case, investors remained hopeful for the aforementioned reasons but they also hoped that a third-party government would stand in for the Russian government and fulfil its obligations. This book assesses the relative weight of each of these reasons to hope and shows why investors refused to view their repudiated bonds as valueless.
Kim Oosterlinck
- Published in print:
- 2016
- Published Online:
- January 2017
- ISBN:
- 9780300190915
- eISBN:
- 9780300220933
- Item type:
- chapter
- Publisher:
- Yale University Press
- DOI:
- 10.12987/yale/9780300190915.003.0005
- Subject:
- Biology, Ecology
This chapter details the reasons which prompted French investors to believe that France might bail them out. During the 19th century the French government had bailed out its citizens who had invested ...
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This chapter details the reasons which prompted French investors to believe that France might bail them out. During the 19th century the French government had bailed out its citizens who had invested in the Mexican bonds the French government had promoted. In the Russian case the French government was even more involved. While legally the French government had never underwritten these bonds, it had vaunted their reliability and attractiveness. This was due to political reasons at a time when France felt it needed the diplomatic support of Russia but it was also the result of vast bribing campaigns undertaken by Russia. The fact that, during the First World War, France had paid the coupons on Russian bonds in the name of mutual assistance between allies put the French government in a delicate position. The chapter details the numerous parliamentary debates held to decide whether or not to bail out French holders of Russian bonds. The chapter concludes by describing the actions undertaken by foreign governments in terms of bailout.Less
This chapter details the reasons which prompted French investors to believe that France might bail them out. During the 19th century the French government had bailed out its citizens who had invested in the Mexican bonds the French government had promoted. In the Russian case the French government was even more involved. While legally the French government had never underwritten these bonds, it had vaunted their reliability and attractiveness. This was due to political reasons at a time when France felt it needed the diplomatic support of Russia but it was also the result of vast bribing campaigns undertaken by Russia. The fact that, during the First World War, France had paid the coupons on Russian bonds in the name of mutual assistance between allies put the French government in a delicate position. The chapter details the numerous parliamentary debates held to decide whether or not to bail out French holders of Russian bonds. The chapter concludes by describing the actions undertaken by foreign governments in terms of bailout.
Kim Oosterlinck
- Published in print:
- 2016
- Published Online:
- January 2017
- ISBN:
- 9780300190915
- eISBN:
- 9780300220933
- Item type:
- chapter
- Publisher:
- Yale University Press
- DOI:
- 10.12987/yale/9780300190915.003.0007
- Subject:
- Biology, Ecology
The first chapters of the book identified all the potential reasons Russian bond prices remained resilient despite the formal announcement of their repudiation. The purpose of this chapter is to ...
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The first chapters of the book identified all the potential reasons Russian bond prices remained resilient despite the formal announcement of their repudiation. The purpose of this chapter is to determine the relative importance of each of these factors from a quantitative perspective. In a first phase the analysis determines the dates on which market prices for Russian bonds underwent major changes. In a second phase, the impact of a specific factor, expectations of a bailout, is scrutinized. Results highlight the predominant influence of events, whether actual or rumored, connected to the Russian civil war. Expectations of repayment by France had a strong influence in 1920 but less so in the previous years. Announcements of a Soviet or White repayment played only a secondary role. As for bailout expectations their impact is far from negligible.Less
The first chapters of the book identified all the potential reasons Russian bond prices remained resilient despite the formal announcement of their repudiation. The purpose of this chapter is to determine the relative importance of each of these factors from a quantitative perspective. In a first phase the analysis determines the dates on which market prices for Russian bonds underwent major changes. In a second phase, the impact of a specific factor, expectations of a bailout, is scrutinized. Results highlight the predominant influence of events, whether actual or rumored, connected to the Russian civil war. Expectations of repayment by France had a strong influence in 1920 but less so in the previous years. Announcements of a Soviet or White repayment played only a secondary role. As for bailout expectations their impact is far from negligible.
Paul H. Schultz
- Published in print:
- 2014
- Published Online:
- May 2015
- ISBN:
- 9780262028035
- eISBN:
- 9780262325929
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262028035.003.0014
- Subject:
- Economics and Finance, Financial Economics
In this chapter, Paul Schultz discusses why it has taken so long to write the rules required by Dodd-Frank. Opinions of conference participants are summarized. There is a consensus view that the U.S. ...
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In this chapter, Paul Schultz discusses why it has taken so long to write the rules required by Dodd-Frank. Opinions of conference participants are summarized. There is a consensus view that the U.S. financial system is now on sounder footing. Participants are sceptical that about whether Dodd-Frank has eliminated bailouts of SIFIs.Less
In this chapter, Paul Schultz discusses why it has taken so long to write the rules required by Dodd-Frank. Opinions of conference participants are summarized. There is a consensus view that the U.S. financial system is now on sounder footing. Participants are sceptical that about whether Dodd-Frank has eliminated bailouts of SIFIs.
Gary Murphy
- Published in print:
- 2016
- Published Online:
- September 2016
- ISBN:
- 9780719097652
- eISBN:
- 9781526109712
- Item type:
- chapter
- Publisher:
- Manchester University Press
- DOI:
- 10.7228/manchester/9780719097652.003.0007
- Subject:
- Political Science, European Union
Chapter six focuses on the Fianna Fáil led government's attempts to fix the economy and stave off political collapse. The property crash and the failure of the banking system brought with a savage ...
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Chapter six focuses on the Fianna Fáil led government's attempts to fix the economy and stave off political collapse. The property crash and the failure of the banking system brought with a savage economic crisis. Most of the government's plans were based around implementing austerity measures to ease Ireland's colossal debt crisis which magnified significantly once the private debt of the banks became the public debt of the state. They all failed. The economic mayhem in Ireland caused by the greed and recklessness of bankers and property developers alike ended up decimating but not killing off Fianna Fáil. The shambolic nature in which the Fianna Fáil Green coalition collapsed is discussed in this chapter as is the election result itself which saw the Irish people revert back to the traditional and comfortable alternative of Fine Gael and Labour.Less
Chapter six focuses on the Fianna Fáil led government's attempts to fix the economy and stave off political collapse. The property crash and the failure of the banking system brought with a savage economic crisis. Most of the government's plans were based around implementing austerity measures to ease Ireland's colossal debt crisis which magnified significantly once the private debt of the banks became the public debt of the state. They all failed. The economic mayhem in Ireland caused by the greed and recklessness of bankers and property developers alike ended up decimating but not killing off Fianna Fáil. The shambolic nature in which the Fianna Fáil Green coalition collapsed is discussed in this chapter as is the election result itself which saw the Irish people revert back to the traditional and comfortable alternative of Fine Gael and Labour.
Costas Simitis
- Published in print:
- 2014
- Published Online:
- September 2014
- ISBN:
- 9780719095795
- eISBN:
- 9781781707005
- Item type:
- chapter
- Publisher:
- Manchester University Press
- DOI:
- 10.7228/manchester/9780719095795.003.0006
- Subject:
- Political Science, European Union
The chapter discusses the circumstances under which the Greek government was forced to seek a bailout from the EU and the IMF. It is argued that the economic measures taken by the Greek government ...
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The chapter discusses the circumstances under which the Greek government was forced to seek a bailout from the EU and the IMF. It is argued that the economic measures taken by the Greek government did not prove sufficient to restore conference in the international markets, leaving Greece with no alternative but to seek external rescue. It is also argued that the Eurozone itself was unprepared to deal with the severity of the unfolding Greek crisis.Less
The chapter discusses the circumstances under which the Greek government was forced to seek a bailout from the EU and the IMF. It is argued that the economic measures taken by the Greek government did not prove sufficient to restore conference in the international markets, leaving Greece with no alternative but to seek external rescue. It is also argued that the Eurozone itself was unprepared to deal with the severity of the unfolding Greek crisis.
Costas Simitis
- Published in print:
- 2014
- Published Online:
- September 2014
- ISBN:
- 9780719095795
- eISBN:
- 9781781707005
- Item type:
- chapter
- Publisher:
- Manchester University Press
- DOI:
- 10.7228/manchester/9780719095795.003.0007
- Subject:
- Political Science, European Union
The chapter examines the provisions of Greece's first Memorandum of Understanding with the IMF and the EU. It is argued that the targets set by the Memorandum were not realistic and the severity of ...
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The chapter examines the provisions of Greece's first Memorandum of Understanding with the IMF and the EU. It is argued that the targets set by the Memorandum were not realistic and the severity of the envisaged macroeconomic adjustment was unprecedented in the developed world. It is also argued that the Greek government failed to negotiate with its creditors a deal that would be better tailored to the socio-economic realities in the country.Less
The chapter examines the provisions of Greece's first Memorandum of Understanding with the IMF and the EU. It is argued that the targets set by the Memorandum were not realistic and the severity of the envisaged macroeconomic adjustment was unprecedented in the developed world. It is also argued that the Greek government failed to negotiate with its creditors a deal that would be better tailored to the socio-economic realities in the country.
Costas Simitis
- Published in print:
- 2014
- Published Online:
- September 2014
- ISBN:
- 9780719095795
- eISBN:
- 9781781707005
- Item type:
- chapter
- Publisher:
- Manchester University Press
- DOI:
- 10.7228/manchester/9780719095795.003.0008
- Subject:
- Political Science, European Union
The chapter discusses the circumstances under which the Greek crisis spread to the European Union. It is argued that, despite the creation of the European Financial Stability Facility (EFSF) in May ...
More
The chapter discusses the circumstances under which the Greek crisis spread to the European Union. It is argued that, despite the creation of the European Financial Stability Facility (EFSF) in May 2010, the financial markets remained sceptical over the sustainability of debt in a number of Eurozone countries. This led both Ireland and Portugal to resort to the EU/IMF for a bailout package.Less
The chapter discusses the circumstances under which the Greek crisis spread to the European Union. It is argued that, despite the creation of the European Financial Stability Facility (EFSF) in May 2010, the financial markets remained sceptical over the sustainability of debt in a number of Eurozone countries. This led both Ireland and Portugal to resort to the EU/IMF for a bailout package.
