How Hedge Funds Held Argentina
for Ransom
Guzman and Stiglitz note:
“It’s common to
hear the phrase “moral hazard” when looking at countries that face crushing
debt, like Greece or Argentina. Moral hazard refers to the idea that allowing
countries (or companies or people) to renegotiate and lower their debts only
reinforces the profligate behavior that put them in debt in the first place.
Better that the debtor faces disapproval and harsh consequences. But the
Argentina deal reversed the moral hazard by rewarding investors for making
small bets and reaping huge rewards.”
Related:
http://vivekjayakumar.blogspot.com/2014/09/debt-restructuring-emerging-markets-and.html