Save the bills of credit.

Debt instruments linked to a foreign currency

It has since added formidably to its debt liabilities.

Admittedly, these were extreme cases, as bids on the debt of Senegal were 38 cents per dollar of debt, for Nigeria 45 cents and Morocco 64 cents.

Europe s debt problems should, in fact, still be quite manageable provided the requisite write downs and debt restructurings are implemented.

I still have some of Taylor's IOUs.

Europe s debt problems should, in fact, still be quite manageable provided the requisite write downs and debt restructurings are implemented.

1000 gold pieces For the liability side of my balance sheet

Only the principal is created by the loans and the principal is the money supply.

In June 1993, for example, only 7 cents per dollar of face value was bid for the debt of Côte d apos Ivoire, while bids for the Sudan apos s debt were 1 cent per dollar and for Zaire apos s debt the bids were 9 cents.

During the Great Depression, many debt contracts were indexed to gold.

Debtor country governments have also bought back their debt on the secondary market.

And Europe s debt problems are now widely acknowledged to be due to ill conceived aspects of European integration.

If the debt ceiling absolutists are naïve, so, too, are simplistic Keynesians.

Countries debts undoubtedly play a vital role in the global financial system.

Borrowing countries such as Argentina or the Ottoman Empire regularly defaulted. They were then punished for a few years by not having access to international capital markets.

Will it be possible for them to rollover their market funding in these circumstances?

But even large and stable countries such as Britain and the US are finding auctions of government paper increasingly problematic.

Borrowing countries such as Argentina or the Ottoman Empire regularly defaulted.

Some crisis prone countries such as Latvia are already unable to sell any more debt.

However, several countries, mostly poor, were in arrears to those institutions.

The debt ceiling absolutists grossly underestimate the massive adjustment costs of a self imposed sudden stop in debt finance.

What really upset investors, of course, was the realization that, yes, some day untenable debt guarantees will have to be withdrawn.

The banks then dump the IOUs on the European Central Bank, which then provides the actual cash.

Therefore, Mr. Chairman, I make a motion to dissolve this institution and turn its assets and liabilities over to the receiver.

These include, overhead legal charges, deflation and motisation, currency fluctuation, foreign exchange and a few other incidentals.

They would have to tackle the banking and the sovereign debt problems simultaneously, without neglecting to reduce divergences in competitiveness.

Nothing less will persuade investors to go near debt issues from the eurozone s fiscally challenged members.

Moreover, China was ready to cancel 10 billion of African debt.

Lenders to defaulting countries were also punished, as their instruments (mostly bonds) became worthless.

For the countries in which the debt servicing burden exceeded what the economy could sustain, debt crises ensued and arrears accumulated.

The 70 per cent figure represented the average discount on the secondary market of the debt papers of severely indebted countries.

Due to this creation of debt formed money, most of the world's money represents a debt with interest to be paid.

To be sure, a huge, sustained burst of growth could still cure all of Europe s debt problems as it would anyone s.

As of June 1993, the average bid on Latin American debt was only 55 per cent of face value.

Indeed, Russia is running fiscal and current account surpluses of 2 and 17 of GDP respectively. Despite being up to its neck in debt its obligations equal 75 of GDP Russia appears able to pay its creditors.

Shorting bonds by purchasing a CDS contract carries limited risk but almost unlimited profit potential, whereas selling a CDS contract offers limited profits but practically unlimited risks. This encourages short side speculation, which places downward pressure on the underlying bonds.

Despite being up to its neck in debt its obligations equal 75 of GDP Russia appears able to pay its creditors.

This encourages short side speculation, which places downward pressure on the underlying bonds.

One extreme is the simplistic Keynesian remedy that assumes that government deficits don t matter when the economy is in deep recession indeed, the bigger the better. At the opposite extreme are the debt ceiling absolutists who want governments to start balancing their budgets tomorrow (if not yesterday).

As a consequence, they are crowding into bonds and debt instruments that they view, rightly or wrongly, as safe vehicles.

Major eurozone economies like Spain and Italy have huge debt problems of their own, especially given anemic growth and a manifest lack of competitiveness.

Of course, the IOUs now lodged with the ECB may themselves have to be written down, threatening to undermine the ECB s own balance sheet.

At the opposite extreme are the debt ceiling absolutists who want governments to start balancing their budgets tomorrow (if not yesterday).

NEW YORK Sovereign debt crises such as the one in Greece can be resolved only through bold steps by both debtor and creditor.