What default means.?

[Goenitz]

A bank will issue a Letter of Credit only when it can guarantee funds. No funds no LC.

If you don't take your wallet and go to a store and buy a TV, will there be a "havoc"? No, you will come back home because the store will not sell you.

Thanx...
that is the reason,,, Traders/exporters will shut down. job will cease. Common man will go maniac.. We export many basic items.. it will trickle down. No chemicals, no fertilizers, no med, no baby formula milk. In addition, less food like wheat, lentils... etc..so chaos may follow

 

[epebble]

No chemicals, no fertilizers, no med, no baby formula milk. In addition, less food like wheat, lentils... etc..so chaos may follow

No; If well managed, the above list will be in positive control. Negative list will include motor vehicles, especially private vehicles, consumer electronics, luxury items like jewelry, fancy clothes, accessories, fancy foods and beverages, foreign exchange for leisure travel. Not sure about foreign exchange for study abroad, may be a limited amount. etc.,

Exchange controls have been around developing economies for a long time. It is neither new nor unusual.

 

[PakSword]

Thanx...
that is the reason,,, Traders/exporters will shut down. job will cease. Common man will go maniac.. We export many basic items.. it will trickle down. No chemicals, no fertilizers, no med, no baby formula milk. In addition, less food like wheat, lentils... etc..so chaos may follow

I am surprised he gave an example of a TV, not knowing that the major part of our import is comprised of "essential" goods.. people will have a survival issue.

But I am quite certain that Arab countries will help Pakistan as they have done in the past so many times.

IK is a ziddi aadmi.. I wouldn't have asked for elections in these times. The government that takes the responsibility of default will become part of history!

 

[Goenitz]

No; If well managed, the above list will be in positive control. Negative list will include motor vehicles, especially private vehicles, consumer electronics, luxury items like jewelry, fancy clothes, accessories, fancy foods and beverages, foreign exchange for leisure travel. Not sure about foreign exchange for study abroad, may be a limited amount. etc.,

Exchange controls have been around developing economies for a long time. It is neither new nor unusual.

Yeah rationing and selective import may help. I know that we import 2 billion$ worth of tea, 3-4 billion $ worth of Palm oil. If you remember, we have sometimes shortages of tomatoes that alone changes the public mood.

But yes, it can be controlled but what about Industry. Our industry need raw material like chemical.. (5-6 billion $) for dyes, paint, fertilizers, med, toffees, shampoos, rubber, leathers, etc you name it. We can sustain a little but not a longer term deficit.

I haven't added the crude oil yet. So, economy will slow down, unemployability will rise, even our food price and production/yield will suffer.

Anyway, you are right. Perhaps people can control. Germany rose from hyper inflation but they worked really hard.

 

[ziaulislam]

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

There is no political suicide
Love is blind

 

[ziaulislam]

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.

Good luck

 

[Imran Khan]

تم لوگ دیکھنا بھکاریوں کے پاس ایک پلان ہو گا اور وہ کہیں نا کہیں سے مانگ لائیں گے

 

[The Accountant]

Guys what is a default ... It means u didnt pay to your lenders on time and as a part of financing agreement then can take number of steps ...

These steps includes.

1. Freezing our assets.
2. FreeIng our lines of credit.
3. Our banks LC is no more acceptable.
4. Extremely do buy goods from international market other than advance payment.
5. Foreign government can take control of over pledged assets like islamabad airport.

The overall result there will be extreme shortage of products imported in Pakistan. Products like petroleum, medicines, wheat and other necessary items will also be in severe shortage ...

So it is now about assets but about surviving ... There will be rationing and black market of every imported product ... To go office we have to get into lines to purchase petrol for the day ...

So those who are claiming that default ks not bad dont know anything ...

 

[maithil]

It basically means the perfect time for India to attack, if it is planning to.

Nàah.. Not a chance.

 

[Imran Khan]

ڈیفالٹ کا سادہ ترین مطلب ہے

آپ سے کوئی پیسے لینے آئے آپ دروازے پر بچے کو بھیج دو اور اس سے کہو ابو گھر پر نہیں ہیں

 

[maithil]

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.

Aren't 90% people in our region already live within their means ? Rest 10% should voluntarily pitch in before default. Because default will result in no food/medicine for those 90%...

 

[VCheng]

Aren't 90% people in our region already live within their means ? Rest 10% should voluntarily pitch in before default. Because default will result in no food/medicine for those 90%...

Ah yes, the poor.

Nobody gives a flying eff about the poor.

 

[ziaulislam]

Guys what is a default ... It means u didnt pay to your lenders on time and as a part of financing agreement then can take number of steps ...

These steps includes.

1. Freezing our assets.
2. FreeIng our lines of credit.
3. Our banks LC is no more acceptable.
4. Extremely do buy goods from international market other than advance payment.
5. Foreign government can take control of over pledged assets like islamabad airport.

The overall result there will be extreme shortage of products imported in Pakistan. Products like petroleum, medicines, wheat and other necessary items will also be in severe shortage ...

So it is now about assets but about surviving ... There will be rationing and black market of every imported product ... To go office we have to get into lines to purchase petrol for the day ...

So those who are claiming that default ks not bad dont know anything ...

They haven't seen countries who defaulted in last 3 years like Lebanon and Latin American countries

They and people of Pakistan live in Lala land.

Hence why we say khata hey tu lagata be hey.


Hence why chatrool is needed

 

[Sinnerman108]

Aren't 90% people in our region already live within their means ? Rest 10% should voluntarily pitch in before default. Because default will result in no food/medicine for those 90%...

actually it is 95/5 % ratio

and it is the luxuries of the 5% that squeeze the 95%/

 

[ziaulislam]

actually it is 95/5 % ratio

and it is the luxuries of the 5% that squeeze the 95%/

5% do it with blessing of the 95%

So it's well deserved