NYT: Sri Lanka Died in a Western Debt Trap, and Others Will Follow

[kingQamaR]

The Rajapakse family in entirely responsible for this mess.

 

[dbc]

Sri Lankans are certainly wrong, but the western countries that lend them money are also wrong.

plz google the reasons for accusation of "China's loan trap", and then replace "China" with "America".

...Western private institutions bought Sri Lanka government issued bonds. These are private institutions or individuals - Western governments have no authority over how these institutions or individuals use their money. Chinese loans on the other hand are government to government deals. Sri Lanka can simply refuse to pay back these western investors the only thing that will happen is Sri Lanka's credit rating will be hit and they won't be able to get new loans from western markets. Western private institutions have no leverage over how and when this loan will be repaid. The Chinese government on the other hand have plenty of leverage and have the power to write off the debt OR apply political / military pressure to reclaim the loan or extract value in lieu of repayment e.g. military base or political influence

Do you now understand and acknowledge the difference?

 

[kingQamaR]

This is only one aspect of a loan. Viability studies are also very important. Countries may try to get hands on reasonable loans. But the loaning country needs to also study the feasibility. Hence the culpability here.

debt trap’? How is it a ‘debt trap’?

Were the loans not given in good faith or something? I mean, usually you would have a clear contract for what happens when repayments are not met. Was that not the case?

 

[MH.Yang]

...Western private institutions bought Sri Lanka government issued bonds. These are private institutions or individuals - Western governments have no authority over how these institutions or individuals use their money. Chinese loans on the other hand are government to government deals. Sri Lanka can simply refuse to pay back these western investors the only thing that will happen is Sri Lanka's credit rating will be hit and they won't be able to get new loans from western markets. Western private institutions have no leverage over how and when this loan will be repaid. The Chinese government on the other hand have plenty of leverage and have the power to write off the debt OR apply political / military pressure to reclaim the loan or extract value in lieu of repayment e.g. military base or political influence

Do you now understand and acknowledge the difference?

they happens to be some private institution in USA, hedge funds are hunting Sri Lanka

Top Emerging-Market Bond Fund Bets on Sri Lanka Default Gain

A top emerging-market money manager who scooped up gains with Ecuador’s restructured bonds is now waiting for Sri Lanka to default to load up on the nation’s debt.

www.bloomberg.com

 

[kingQamaR]

What Sri Lanka owed to China is about 10% of its total debts, the remaining 90% of Sri Lanka’s debt were to IMF, World Bank, Japan and other countries. What make you think the other 90% of Sri Lanka’s debt are not debt trap?

 

[dbc]

they happens to be some private institution in USA, hedge funds are hunting Sri Lanka

Top Emerging-Market Bond Fund Bets on Sri Lanka Default Gain

A top emerging-market money manager who scooped up gains with Ecuador’s restructured bonds is now waiting for Sri Lanka to default to load up on the nation’s debt.

www.bloomberg.com

hedge funds buy distressed debt at a steep discount. When this happens the person or institution that originally purchased the bond usually sells it to the hedge fund at a significant loss.

not sure why you are attempting to obfuscate this discussion by bringing up hedge funds.

Why Hedge Funds Love Investing in Distressed Debt

Learn how distressed debt can be a good investment for hedge funds, and find out if the risk/return relationship is suitable for individual investors.

www.investopedia.com

 

[MH.Yang]

hedge funds buy distressed debt at a steep discount. When this happens the person or institution that originally purchased the bond usually sells it to the hedge fund at a significant loss.

not sure why you are attempting to obfuscate this discussion by bringing up hedge funds.

Why Hedge Funds Love Investing in Distressed Debt

Learn how distressed debt can be a good investment for hedge funds, and find out if the risk/return relationship is suitable for individual investors.

www.investopedia.com

Hedge funds are all private funds, which means that the elites who fund them have great influence on the govt.

There are many ways for hedge funds to make money, such as short or long currencies, stocks, futures and so on. This is the power that can really push one or more countries into hell.

In 1997, the whole Southeast Asia was pushed into hell by hedge funds. At that time, American hedge funds started to attack Southeast Asia by shorting the Thai currency. In 2022, US hedge funds are attacking the whole of South Asia.

 

[Nan Yang]

This is only one aspect of a loan. Viability studies are also very important. Countries may try to get hands on reasonable loans. But the loaning country needs to also study the feasibility. Hence the culpability here.

Feasibility study is one thing but if you do not follow through with it, don't blame China.

 

[dbc]

Hedge funds are all private funds, which means that the elites who fund them have great influence on the govt.

There are many ways for hedge funds to make money, such as short or long currencies, stocks, futures and so on. This is the power that can really push one or more countries into hell.

In 1997, the whole Southeast Asia was pushed into hell by hedge funds. At that time, American hedge funds started to attack Southeast Asia by shorting the Thai currency. In 2022, US hedge funds are attacking the whole of South Asia.

hedge funds exists to make money for their investors, if they have to sell their own mothers to do it then - they will. Ignoring your conspiracy theories about Thai currency.

 

[Beast]

As I've said elsewhere in this forum, Sri Lanka's debt is because of Sri Lankan people's delusional expectations from their government. They always had the choice to not borrow and instead have a slower economic growth with lesser income and state subsidies. They elected leaders who would rather provide them socialism (or growth) on borrowed dime. Democracy after all can only give leaders that people deserve, not what they need

Still cant deny the fact, most of the debt is not by China but western and Japan.....

 

[K_Bin_W]

What Sri Lanka owed to China is about 10% of its total debts, the remaining 90% of Sri Lanka’s debt were to IMF, World Bank, Japan and other countries. What make you think the other 90% of Sri Lanka’s debt are not debt trap?

It absolutely is, But the west is foaming at the mouth for obvious reasons... If it's a success west takes credit if it fails its China's debt trap. LOL...

Like they say - Success has many fathers failure is an orphan...

 

[jhungary]

Your bank had not interfered to your personal and family business. U.S. and India did.
That's the difference.

depends on what do you mean by interfere.....

And if I failed to repay my repayment, they will definitely interfere.......

 

[dbc]

It absolutely is, But the west is foaming at the mouth for obvious reasons... If it's a success west takes credit if it fails its China's debt trap. LOL...

Like they say - Success has many fathers failure is an orphan...

is it coincidence that the nations that have defaulted or are on the threshold of default all have exposure to Chinese loans.

In total, the Chinese state and its subsidiaries have lent about $1.5 trillion in direct loans and trade credits to more than 150 countries around the globe. This has turned China into the world’s largest official creditor — surpassing traditional, official lenders such as the World Bank, the IMF, or all OECD creditor governments combined.

How Much Money Does the World Owe China?

China’s growing role in international finance has remained obscure, mostly due to a lack of data and transparency. The authors’ research, based on a comprehensive new data set, reveals that between 1949 and 2017, the state and its subsidiaries lent about $1.5 trillion to more than 150 countries...

hbr.org

 

[Menthol]

It's always easier to blame others. Whenever a country plunges into a debt crisis, they blame foreign 'exploiters' for their 'unfair' loan agreement. 'Exploiters' from the West to Japan to now China.

But do they reflect on themselves? Did these 'exploiters' force a gun on them? Where did the money go? Some went to corruption and a large part went to unsound economic policies like populist state subsidies. But when the government implement unsustainable populist policies, did the people go out and protest?

Why are such policies so popular, so much so that politicians implement them to gain popularity, when everyone knows it's unsustainable? Because the people are only concern of their short-term benefits without considering the long-term consequences.

Well, then they have to pay the price one day. That's the people's choice. That's 'true democracy'.

This is similar to the documentation I watched on how Europe went bankrupt around 10 years ago and how many USA cities are bankrupt.

For Europe, for the sake of politicians to be elected, they promised too much too big.

For USA cities, they practicing a Ponzi scheme.

So yes, they look great at the time but killed the future.


As Aristotle said, a candy maker vs a doctor, between candy and bitter drug, everyone will choose candy over bitter drug.

So yes, this is the result of the candy in the long run.

 

[K_Bin_W]

is it coincidence that the nations that have defaulted or are on the threshold of default all have exposure to Chinese loans.

In total, the Chinese state and its subsidiaries have lent about $1.5 trillion in direct loans and trade credits to more than 150 countries around the globe. This has turned China into the world’s largest official creditor — surpassing traditional, official lenders such as the World Bank, the IMF, or all OECD creditor governments combined.

How Much Money Does the World Owe China?

China’s growing role in international finance has remained obscure, mostly due to a lack of data and transparency. The authors’ research, based on a comprehensive new data set, reveals that between 1949 and 2017, the state and its subsidiaries lent about $1.5 trillion to more than 150 countries...

hbr.org

You mean like SL... lol.. SL is only 10% how about the 90%...?