Finmag (Finmag)
Finance  |  December 09, 2010 11:42:55

Bankrupt the European way (II): The magic of reformed sinners

The economic history knows almost countless cases of insolvency law. Country Newfoundland gained full independence in 1907. In 1933 it became clear that the accumulated debt in the size of about 330 percent of GDP. After a brief examination of the only possible solution left: to cancel. Others were more successful bankrupt. Spanish King Philip II. (Reigned from 1556 to 1598) declared insolvent four times. Yet always find bankers who lent him again. Why? More in the second episode.

The first episode of bankruptcy are European (I): Stories of War can be found here .

In the case of Newfoundland was a solvency crisis: the government was unable to finance the debt under any circumstances. Revenues were less than expenditures and could not be increased. Philip II. by contrast, was essentially solvent - his kingdom was rich, but he sometimes ran out of money. In such cases we are talking about a liquidity crisis. It might also know: do not suffer from poverty, you have a decent income, but by far and payment wallet is empty. Liquidity is missing. Conversely, you may be insolvent with a full wallet. Just make twenty thousand to spend twenty thousand. You can still be liquid but insolvent long. Your personal finances need reform. Debt Busters.

Solvency and liquidity

Continuation of article here

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Bankrot po evropsku (II): Kouzlo napravených hříšníků

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