What default means.?

[VCheng]

Lol..

What do you think from where and how Pakistan will get the required commodities. Please don't think that I want to argue. Maybe I am missing something. Sri Lanka's bailout package was 4 billion USD only. Pakistan will require much more than that.

So people will have to learn to survive with less, that is for sure. But then, Pakistanis must learn to survive within the limits of what they can actually afford from their own resources, not what they can afford supported by more and more debt. That is good bitter medicine to take.

The problem is the stigma. As individuals, we avoid it as it shows the third person you failed. We went through that phase also, but in the end, we said screw it; the system allows us why should care about what others think. Ultimately, we must keep the kitchen warm and the food on the table.

There is no honor or stigma in international geopolitics. If national interests are best served by default, then it is the correct step to take.

 

[Menace2Society]

Forward thinking countries save up for these times and buy other country assets on the cheap or provide relief to their people.

You do not have any savings, incompetent chor jahil families running your economy who borrowed and didn't produce when times were good, and a junk grade currency.

A lesson for anyone abroad never invest in 3rd countries without connections.

Its going to get a lot worse for you before it gets better and even that is a big IF.

 

[PakFactor]

What makes you think that it will be survivable?

Mostly, IMF provides a bailout package. Pakistan was struglling to get trenches of an approved loan when the default risk was low.

There are two sources that Pakistan will approach. IMF and the Islamic world. If both hesitate, I don't know for how long people behave nicely without electricity, petrol, LNG and wheat.

We should expect scenes of Sri Lanka in Pakistan where people will be dragging the politicians out of their dens. This time, the situation will be worse as the majority thinks that establishment is behind all the mess.

Lol..

What do you think from where and how Pakistan will get the required commodities. Please don't think that I want to argue. Maybe I am missing something. Sri Lanka's bailout package was 4 billion USD only. Pakistan will require much more than that.

I'm reminded of Tupac's words in his music, which fit Pakistan quite eloquently; he said, "I'm from the gutter, and I'm still here," after being shot. After IK was shot, I was under the impression that things would go haywire, but our people are very docile. They like to take punishment. Another aspect you must consider is the iceberg approach to Pakistan; you only see 20% while the rest 80% is an underground activity in the country. We will survive. As for the money, it'll come if you get the house in order.

 

[ziaulislam]

Best thing is to get gold or silver against whatever cash you have.

I don't agree with your comment about real estate. In the short term, real estate will serve as an asset like any other asset.

Basically, anything other than PKR is good.

Not really ..when economy tanks real estate tanks too.
This isn't an inflation issue. It's an economy problem

Forward thinking countries save up for these times and buy other country assets on the cheap or provide relief to their people.

You do not have any savings, incompetent chor jahil families running your economy and a junk grade currency.

A lesson for anyone abroad never invest in 3rd countries without connections.

Its going to get a lot worse for you before it gets better and even that is a big IF.

People deserve this. I feel no pity
We were abused for pointing out this can happen.
We were called youthias

In business, we consider it a cleaning phase, as if you are removing the excess fat of a chicken if done correctly before cooking it. My family's business went through it during the 2009-2010 economic phase with tenants leaving, etc., but we came out much cleaner and more robust with a stronger balance sheet. It's not the end, but a new beginning if appropriately managed.

Not really
Default isn't a washing machine

 

[PakFactor]

So people will have to learn to survive with less, that is for sure. But then, Pakistanis must learn to survive within the limits of what they can actually afford from their own resources, not what they can afford supported by more and more debt. That is good bitter medicine to take.



There is no honor or stigma in international geopolitics. If national interests are best served by default, then it is the correct step to take.

I edited my post before you replied; I mentioned the political suicide aspect.

 

[waq]

The graphs and the economics,on the basis which you are predicting default, are frankly irrelavant in the context of Pakistan. A simple example is the market based dollar pkr parity (presented as some heavenly solution) which only fuelled inflation for common man and speculation by the bigwigs. So relax and stop this fear mongering. Pakistan is not going to default.

 

[PakSword]

So people will have to learn to survive with less, that is for sure. But then, Pakistanis must learn to survive within the limits of what they can actually afford from their own resources, not what they can afford supported by more and more debt. That is good bitter medicine to take.

What you are saying is understandable. If an individual defaults, or a corporation defaults, what you have said actually applies.

Default impacts different countries differently. I am just thinking, what will be the sequence of events that will happen after Pakistan defaults on loans and declares bankruptcy.

First question is.. whether Pakistan will also default on its local currency loans or will it print more money to service the local loans? If it does, how much devaluation one can expect.

Whether the government will restrict people from drawing their own money from the banks? If it does, how does it plan to support the livelihoods in the short term?

Pakistan produces energy mostly with the imported oil and gas. Pakistan doesn't produce enough wheat and other crops that are key for people's survival. What is the government's plan to get these things?

If Pakistan is unable to import oil and hence cuts off the power of industries, the businesses will not be able to honor their agreements, and hence will close. This may lead the economy tailspinning into a lot of mess.

I am not saying that default is always bad. It has some positives as well. Things get so cheap in foreign currency terms that their is an influx of foreign investors into the country. But if that has happened in many other countries that have defaulted, it doesn't mean that Pakistan can attract the foreign investment and tourism in the same manner.

To attract a foreign investor or a tourist, three things are very important:

1 - Political stability
2 - Security
3 - Justice system

We all know how strong we are in these departments so lets not go into that detail.

Again, I know that Pakistan will definitely survive this, but what is the impact that you foresee on people's lives.. and how much chaos you expect.. is it like Sri Lanka or the French revolution type?

 

[epebble]

If defaults happen
Which is 92% chance(up from 5%)

The first thing to be useless will be rupee.so get everything out of rupees.

The second thing to go will be dollars in banks. Get them out of the banking sector/govt will confiscate them


Third thing to go will be real estate. Real estate values will fall as a lot of foreigners will cash out of it.

Basically just see what happened in Afghanistan..that's your template.

Hoard dollars as much as you can.
No wonder my family were selling dollars at 250 4 months ago in black. I have checked but rumours are they are running at 300+

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Not sure your background in finance and economics. But all that you have said is incorrect.

1. Sovereign default of Pakistan is highly unlikely. Most of the foreign debt is multilateral/institutional or bilateral. Nobody gains by forcing default. Everybody will work hard to reschedule or rollover the debt. They can't just go and get CDS from a counterparty.

2. Even if a sovereign default occurs, its impact is on foreign currency transactions. Domestic currency will be unaffected. Already, foreign currency is unavailable for general imports. It is being conserved for food and fuel. So, it is already a DeFacto default, but most people are not even noticing it. Except those who want to import stuff.

So, Rupees unaffected, except inflation. Dollars already unavailable for general imports. So, no difference.

3. Can't say what impact on Real estate will be as foreigners can sell but can't repatriate their earnings anyway. So, why would they sell and keep money in depreciating Rupees?

4. What happened in Afghanistan is extreme case; they are cutoff from external world. Pakistan will still be on international banking system. People can send money in from abroad. Imports will still happen, at a reduced pace.

5. "Hoarding " dollars may help in the sense that it will not depreciate compared to holding rupees. But those with a lot of rupees tend not to hoard cash.

 

[Goenitz]

Lol..

What do you think from where and how Pakistan will get the required commodities. Please don't think that I want to argue. Maybe I am missing something. Sri Lanka's bailout package was 4 billion USD only. Pakistan will require much more than that.

@Norwegian
Why he is banned? He knows economics

 

[villageidiot]

The second thing to go will be dollars in banks. Get them out of the banking sector/govt will confiscate them

what about USD savings offshore, like in payoneer? You can bring those in as needed. Govt gets the USD and you get the rupees you need.

Or am i missing something?

@PakSword ?

 

[VCheng]

Again, I know that Pakistan will definitely survive this, but what is the impact that you foresee on people's lives.. and how much chaos you expect.. is it like Sri Lanka or the French revolution type?

Pakistani people have an endless appetite for punishment, as already observed:

but our people are very docile. They like to take punishment. Another aspect you must consider is the iceberg approach to Pakistan; you only see 20% while the rest 80% is an underground activity in the country. We will survive.

And as for this:

I edited my post before you replied; I mentioned the political suicide aspect.

Anything even remotely associated with politics in Pakistan these days deserves to die a most ignoble death, so this may be a good thing.

 

[HAIDER]

Does anyone know open market, blackmarket rate of dollar in Pakistan? and if available easily.

 

[Goenitz]

The LCs are still closed since few months (Letter of Credit). When these will open for imports, havoc will follow. No $ and no imports. Power, food, chemicals, pharma, fertilizers, etc all will be affected.

 

[villageidiot]

We should expect scenes of Sri Lanka in Pakistan where people will be dragging the politicians out of their dens

Maybe street justice is the bitter pill that we need i.e clean things up, start all over. Pretty sure if push comes to shove, IK can ride it safely if he uses his brain and protects himself. and the corrupt unlucky bastards who can't escape to the west on time, their ticket gets punched.

This time, the situation will be worse as the majority thinks that establishment is behind all the mess.

Common soldier also gets paid in PKR.

 

[Goritoes]

We are getting default because we don't offer Fajr ki Namaz, look at Army their business is so successful.