Word: defaulting
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Other voices, however, are beginning to demand what to many bankers is unthinkable: declare Poland in default. That would probably trigger a worldwide rush to seize Polish assets located outside the country. It could also push the international banking system toward chaos...
Advocates of default insist that Poland's creditors have an unparalleled opportunity to pressure the Soviet Union by squeezing its troubled satellite. Says Felix Rohatyn, a partner in the investment-banking firm of Lazard Frěres: "For the first time in 25 years, the Western governments have a truly credible weapon in their armory, and that's control of the capital markets. The Russians can get technology elsewhere, and lots of people will provide them with grain. But nobody else can make the capital available." A default declaration might force the financially pressed Soviet Union to increase...
Defense Secretary Caspar Weinberger also favors default. In addition, the AFL-CIO executive council last week called for a declaration of default during a meeting in Bal Harbour...
...move. Says Rimmer de Vries, a senior vice president of Morgan Guaranty Trust Co. and a member of TIME's Board of Economists: "This is a very urgent issue that needs to be handled very carefully." Not a single member of the board was willing to recommend a default during a discussion of the topic at this month's meeting. Lawrence Brainard, a senior international economist with Bankers Trust Co. in New York City, warns that default would set off "an unholy scramble" to grab the few Polish assets in the West. Unlike Iran, which had an estimated...
Moreover, bankers warn, calling the loans would dry up the trickle of payments that the Poles are actually making. Says a leading U.S. moneyman: "Poland is not paying anything more than nickels and dimes right now. But with default, we don't even get that...