Dec 8, 2004

Public Debt

I plucked this gem out of a very informative article about the current state of the Argentine economy and a thorough explanation of how it got there.

"In regard to public debt, governments do not pledge their own assets, but taxpayers' instead, with creditors cognizant that the principle and interest will be paid through the involuntary confiscation of private property - —taxation. In effect, both sides are complicit in the violation of property rights of a third party in the future, which scarcely deserves to be acknowledged as a contract."

The quote struck me because of all the recent talk about the U.S. deficit and how little willingness there is to fix the problem.

The article is also a good read because Argentina has a mountain of debt and from the looks of things there will be several months of erratic headlines about how the country resolves its obligations with creditors.

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