A frightening word "default". What does this mean?

New century - new terms. Naturally, everything is relative. And a new time comes into our lives, not checking the calendar. At the end of the last century, society was confronted with a concept that did not want to know at all. The fate of the representatives of Russia suddenly came default. What is it?

What is threatening? Now many people understand the answers to these questions, because they have experienced all this on themselves. Let's repeat the lessons of history, so as not to forget with such difficulty the material passed.

Definition and history

The concept of "default" arose in the economic law. This term was used to refer to a situation where the subject of relations does not have an opportunity to fulfill the obligations undertaken. Simply put, he promised a lot, and when it came to implementation, it turned out to be untenable. At the same time this concept is not strictly state, as we are accustomed to believe. Not always mean, recognizing default, that this lack of funds and the inability to pay bills. There are other obligations that the subject can not fulfill for various reasons. For example, I have not coped with the situation and can not deliver the already paid goods. Such an enterprise can declare default. What does this mean in practice? It is liquidated, and debts will be repaid using existing fixed assets and authorized capital.

Types of Defaults

I must say that many people consider the word "crisis" to be a synonym for this concept. That is, a situation where a turn in one direction or another is inevitable. It is clear that usually it is a terrible catastrophe. Others say, describing the default, that this is an even more terrible and unpredictable situation. Often it threatens with social collapse.

There are three types of default. Ordinary can declare an enterprise. This means that there is no money and there is nowhere to take them. Often after this, the company is declared bankrupt. Technical - this is, rather, a legal trick. Payment of obligations is impossible, although in fact there is money. Most often it is announced when there are problems and inconsistencies with documents. Sovereign - it is people who are afraid of him. They are threatened by governments and states. Let's talk about it in more detail.

Sovereign default

When the treasury is empty, the resources are running out, the country is in crisis. To get out of it with the least losses, the government declares a default. What does this mean for the population? Depends on what exactly the default was declared. The fact is that the state can refuse both internal and external obligations. In the first case, it stops paying those who borrowed money from it (to other countries, to various international funds). In the second - to its citizens. These debts, according to state declarations, are written off. That is, creditors can not demand them. If you are interested in events in the world, you can observe how the EU is trying to pull out one or another country from the crisis. Just if, for example, Greece now declares a default, the IMF will lose a lot of money, which has already invested in this country. It is much more profitable to give more to the debtor to give back the previously occupied one, and so on.

At the state level, the situation with the accumulation of loans is winding up in geometric progression. Now, for economists, finding a way out of the debt carousel is one of the main issues. It is believed that under the threat of default now is not one or two countries, but the whole world.

What a default threatens the common man

If the country becomes bankrupt, everyone suffers. The matter is that citizens cease to receive those payments which are established by the legislation. Benefits, pensions, etc. Cease to flow into their accounts. Further more. Cash benefits are just the tip of the iceberg. The state ceases to subsidize production, closes the enterprises. Consequently, unemployment is rising amid a price shock. Entrepreneurs producing goods, it is almost impossible to survive in such a situation. And since there are no material values that cease to be produced (grow, and so on), then there is a famine. To import food from another state, there is no money either. This situation should be avoided in all possible ways.