Yes I agree. The only incentive not to default is future reputation and creditworthiness. There is no moral reason such as keeping your word, because the people currently paying the debt often never gave their word in the first place. A corporation or government is an institution not a moral agent, and thus has has no moral conscience like an individual does. Moral obligations do not jump from individual to individual, otherwise we would be liable for the crimes and debts of our parents and grandparents, and the US government would all be slung in jail for the sins of genocide and slavery.
So you think debt is owed not just by the person or legal entity who borrowed the money, but whoever that person or entity then gives the money to? By that logic, if I borrow a fortune and give it away to friends, or spend it in shops, then the friends & shops would be liable for the debt. Clearly that is nonsensical. Debt does not have any moral force beyond the terms agreed to, either explicitly or implicitly. It is a voluntary contract, not an imposed one like a lien or fine or war reparations. Government loans are clearly given and received under the understanding that they can be defaulted on at any time, with no recourse to the *citizens* of the country in question. The *government's* assets abroad (except those with diplomatic immunity) can be seized in the event of default, but not the assets of citizens. If you disagree, I invite you to give even one legal decision where a court has said it's legal to seize the assets of one of a defaulting country's citizens. With a corporation, the agreement is to pledge shareholder assets to back the debt, but nothing beyond that. There is limited, not total, liability for shareholders. Equally, management have no personal liability for corporate debt, just as citizens and representatives have no liability for government debt. Talk of the legal system collapsing is hyperbole. There are established procedures for both corporate and government default. They are based purely on law. If an corporation defaults, then creditors get a claim on the corporate assets. If a government defaults, creditors get a claim on certain overseas assets. That's it. No claim on managers, shareholder's personal wealth, citizens, elected or non-elected representatives etc. No one goes round seizing the government's domestic buildings, sewers, airports, roads, military vehicles etc.
The obligation never laid with the president, its with the Republic of Ecuador, no one is calling for jailing Correa but for Ecuador(through their representatives) to stand up to their commiments The president is behaving wrongly if he says all the legal commiments taken by the Republic are only valid to the extend that HE chooses to He was choosen as representative of the Republic, he might not personally have a moral obligation but as a representative of the republic he does. Just imagine the results of the kind of society you are suggesting if this kind of behavior is not frowned upon. If non-living entities commiments can be changed to the extend that whoever is controlling it wants AND SOCIETY DOESN'T DISLIKE THAT BEHAVIOR(by calling it imoral), you just created an enviroment where its ok to HARM THIRD PARTIES to your own political or monetary gain(and use current law as an excuse to do harm) I'm talking of cases where the country can clearly afford(like on this one), if they can't changing previous commiments is the equivalent of a bankruptcy restructuring and that is more resonable I thought we were discussing morality not legal history. My point is that they have an moral obligation EVEN IF international law protects them. If someone lends $1m to my coporation and I default on it because I sent my assets to an offshore jurisdiction where he can't seize it(changing my ceos in the process so he can make that argument), international history law and the law code might be behind me but thats BAD BEHAVIOR lol, I knew this one was coming, thats why I added 'and the name on which the debt is held'
so by your logic, when Obama took office he can default on all of the US debt for the last 8 years then. Because it was borrowed by that idiot bush and not him? Give me a break, a country is treated as a singularity when it comes to credit worthiness and national debt obligations. Otherwise the credit market would not exist and a lot of the third world / developing country who relies on this cash to build and improve their infrastructure/living conditions would be fucked, it will signficantly hinder progress. Ecuador should not have defaulted, by doing this the guy guarenteed his country will be in the shitter for many years to come.
Read Confessions of an Economic Hit Man, chances are the debt was undertaken under the threat of being killed. It probably really was immoral at the inception. Maybe Venezuela and the Russians and Iran have enough influence in the area that Ecuador can raise the middle finger to the lenders? I certainly won't be found to be judging them for that. What the hell, the lenders can't even trust each other, overall it's a very weak outfit.
That's exactly why they're loaning to banana republics, so then can turn them into banana-less dictatorships. Ever heard of Indonesia? Literally one of the poorest country on earth and it pays 50% of its budget for interest on its debt. 250 million people living in slavery over there. It's a sweet gig, those sweat shops can last a long time. And Argentina's debt was illegal.