Oct 3, 2019

Developed countries default

Adapted from Beers, et. al, 2019, "The BoC-BoE sovereign default database: What’s new in 2019?"; Chart: Andrew Witherspoon/Axios

The world's most comprehensive database of sovereign defaults, run by the Bank of England and the Bank of Canada, has been updated for 2018, and once again advanced economies are driving the numbers.

Background: Countries defaulting on their debts have caused enormous problems for the international financial system since the Latin American debt crisis of the mid-1980s.

  • Until this decade, the world's developed countries always found themselves as the creditors, not the debtors. Greece changed that in 2012, when it became the biggest deadbeat sovereign of all time.

What's new: Greece defaulted on $111 billion owed to the EU. (The European Stability Mechanism allowed Greece to push back its debt service payments and reduce the interest rate it was paying, which counts as a debt default for the purposes of the database.)

  • The other big debtors in 2018: Venezuela with $64 billion of debt in default and Iraq with $41 billion.

The big picture: As countries struggle with growing debt burdens, sovereign debt problems will become increasingly common.

  • Argentina looks certain to default again; Venezuela has lost control of Citgo, its most valuable asset; even Portugal was added to the database in 2013 thanks to another EU restructuring.
  • Conceivably, even the U.S. could find itself in default if congressional gridlock prevented the debt ceiling from being raised.

Go deeper: The global debt binge begins anew

Editor’s note: This post has been corrected to delete references to Puerto Rico, which is a U.S. commonwealth, not a sovereign country.

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The rise of debt consolidation

Reproduced from TransUnion; Chart: Axios Visuals

New data from TransUnion suggests traditional banks might not be able to squeeze quite as much money from their credit card customers as they have in the past.

Background: For all the talk of banks being disrupted by nimbler digital competitors, it's generally impossible to see anywhere they've suffered so much as a flesh wound.

Go deeperArrowOct 31, 2019

Media streamers wrestle with high debt loads

Data: Moody's; Chart: Axios Visuals

Streaming companies are accruing more debt to sustain heavy investments in content, and their leverage is historically high.

Why it matters: While most analysts agree that the debt loads at these companies are manageable for now, some firms are beginning to feel investor pressure to manage rising debt before it gets out of hand.

Go deeperArrowOct 15, 2019

Debt-free college: Where the 2020 presidential candidates stand

Sen. Amy Klobuchar, Beto O'Rourke, Rep. Tulsi Gabbard and Sen. Cory Booker. Photo: Getty Images.

A clear divide exists among 2020 Democrats who are rolling out plans to tackle the student debt crisis, whether tuition-free or debt-free policies are the way to win voter support.

By the numbers: Student debt in the United States has reached $1.5 trillion, and it is responsible for much of millennials and Generation X's anguish.

Go deeperArrowUpdated Oct 8, 2019