Friday, February 13, 2015

The Coming Ukraine "Bailout" is Really a Bankruptcy

The government of Ukraine's finances are a mess, and they are only getting worse, as a result of  the costs of the civil war, plus the lost production it causes.

Earlier this week, International Monetary Fund  chief Christine Lagarde unveiled an expanded emergency rescue package to keep Ukraine’s war-torn economy from collapse. The fund chief said some of the $40 billion in financing would come via creditors.

But here is the kicker, as WSJ points out:
But what Ms. Lagarde failed to clarify is how much of the $40 billion in financing the IMF is assuming will come from the planned bond restructuring, or as the fund put it, “debt operations.”
In a new report, the IIF industry group says around $17.5 billion is expected from the IMF. Another $9.2 billion will come from U.S. loan guarantees, low-interest loans and grants from the World Bank, the European Bank of Reconstruction and Development and other major Western economies.
“The remainder of the package (or $13.3 billion) is envisioned to come from a PSI exercise with holders of Ukraine’s external debt,” the IIF said, referring to “private sector involvement,” market lingo for a debt-restructuring.
That's a pure and simple bankruptcy.



  1. Yes, but think of all the pent up demand it'll create when rebuilding! At least that's what Paul Krugman tells us.

  2. Intelligent people know the world is in deep shite as reporters and politicians have abandoned calling things what they really are. There is a massive world-wide depression coming and it will make the "Great Depression" look like nothing. A century of silly misguided and destructive liberal spending to buy elections has us up to our eyeballs in debt. The time to pay the piper is near. The can is almost at the end of the road. Stock up on canned goods and blankets, folks.