On 12/05/2017 14:49, Neal wrote:
> Access to credit is just like me applying for a bank loan. My ability to get the loan is all about my financial reputation which is the score that indicates my likelihood of paying it back. The Saudis have an excellent reputation, while Venezuela has fallen about as far as one could get. Seizing foreign owned businesses is not something that's going to impress lenders.
>
A countries borrowing is not just like you or me applying for a bank
loan. For a start most countries will never pay back the money they
borrow. Do you think USA will ever pay back 19 trillion?
Some countries are so large and have so much debt that they are too big
to fail. That old saying, owe the bank £100 and you worry, owe the bank
£1 million and they worry, springs to mind.
A countries credit worthiness is largely based on it's debt to GDP
ratio, which is used to assess whether it can pay the interest. All is
not equal in that the respect and that is were the politics comes in.
Just as there are many leaders in the EU who will be determined to make
Brexit fail, there are many countries around the world who are
determined to make Socialism and Communism fail, for obvious reasons.
For example money is still being poured into Ukraine, which is much
less likely to service it's debts than Venezuela. That has much more to
do with the advance of NATO further east than any sensible finance. One
loan offered a few years ago included the condition that Ukraine joined
NATO. That threat then prompted Russia to move to protect it's military
base in Crimea.
I doubt you have any such considerations when you apply for a loan,
although somebody may come and seize your stuff if you don't pay, just
one more complication when it comes to loans to governments.