The last straight-up default was Argentina, and investors still got .35 cents back. There are still some vulture funds out there going for full recovery,

While of course there have been defaults that have gone to zero, the historical recovery is actually much higher than .35 cents.

Anyway, it's important to understand why Argentina paid the .35 cents rather than nothing:

In this modern world, there are all sorts of things that spurned investors can do to harm a country that defaults. So, if you want to maximize the present value of your default, you are not going to pay zero. Rather, you are going to pay enough to that investors choose to take your payout rather than to pursue decades of litigation and other methods of recovery.

So, given the possibility of European bailouts or even sponsored restructurings, Investors at least ought to get the .25 cents back, and most likely much more.

Stefan Jovanovich comments: 

Europe needs Henry Pelham, but there is no chance that she will get him. Pelham is the U.S. Grant among British Prime Ministers. No one among the official keepers of history has a good word for him; yet his Consolidation Act of 1749 was the fulcrum point for the explosion of production and finance that is now laughably described as The Industrial Revolution. Like Grant's Resumption bill the Consolidation Act - which replaced all outstanding government debt - established a permanent benchmark against which all markets could trade - the Consol - i.e. Consolidated Annuity– that had no maturity date.

As part of the Consolidation Act, the Royal Navy was reorganized so that the system of purchasing commissions and supply contracts was opened to examination and audit. Pelham - like Grant - was criticized for allowing a far lesser corruption to continue rather than praised for eliminating a "spoils" system so rotten that it left British merchantmen at the hands of Spanish privateers (perhaps the only time in the history of the Royal Navy when the score was Spain 1, Britain 0).

"A man can accomplish anything he sets his mind to once he decides that he does not care who gets the credit for its accomplishment."


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