What happens when a country fails? – Lesson to learn from Argentina: pay all your debts in time.
Argentina decided that it will not pay anything to creditors. But it is not so easy to step aside. A group of hedge funds took the entire country to court. What are the results? Check out the entire story:
În India, guvernatorul speriat de înmulţirea cobre lor oferea pentru fiecare cap de şarpe un premiu, cu rezultatul că unii au început să crească cobre ca să le vândă. Efectul cobra este caracteristic situaţiei potrivit căreia, intenţia bună a guvernaţilor are un efect exact contrar.
– Tequila Effect
Informal name given to the impact of the 1994 Mexican economic crisis on the South American economy. The Tequila Effect occurred because of a sudden devaluation in the Mexican peso, which then caused other currencies in the region (the Southern Cone and Brazil) to decline. The falling peso was propped up by US$50 billion loan granted by then U.S. president Bill Clinton. Also referred to as the “Mexican Shock”.
Immediately after the Mexican peso was devalued in the early days of the Presidency of Ernesto Zedillo, South American countries suffered rapid currency depreciation. It was a known fact that the peso was overvalued, but the extent of Mexico’s economic vulnerability was not well known. Since governments and businesses in the area had high levels of U.S. dollar-denominated debt, the devaluation meant that it would be increasingly difficult to pay back the debts.