US Government Debt Different - Finance Department - University of ...

234 United States Sovereign Debt: A Thought Experiment On Default And Restructuringmunity from execution on a state-by-state basis around the world.Notwithstanding broad immunity from execution, experiences withrecent efforts to enforce judgments against other sovereigns, suchas Argentina and Iran, suggest that the U.S. could expect to battlemany attempts to execute on commercial assets found outside theU.S. Moreover, given the likely dollar amounts of defaulted U.S.Treasuries, these battles could be massive in scale when compared toearlier experiences with other sovereign judgment debtors.V. ConclusionOne goal of this paper has been to evaluate the feasibility of any typeof restructuring of U.S. sovereign debt that would involve a materialhaircut (legal or de facto) of U.S. obligations. This essay has shownthat a selective default and restructuring is feasible from logisticaland informational perspectives and problematic but possibly feasiblefrom a legal perspective. But this evaluation is only a first step in adiscussion and analysis that should continue.Further study of the circumstances—if any—under which a U.S.default and restructuring would be beneficial is important. Whenthe national and global impact of such an approach is considered, itmay be that default and restructuring is not, on balance, a realisticalternative. If that turns out to be so, it is nonetheless useful to knowthat and to know why it is so. The concern that sparked this essay derivesfrom the apparent absence of evidence that anyone has exploredthe question in any depth. That failure, no doubt, was influenced bythe failure to recognize that the new possible is the impossible. In thenew normal, everything is thinkable.Finally, there may be a kernel of a lesson in this paper for states otherthan the U.S. which may need to restructure sovereign debt in thefuture. The idea of a sovereign debt restructuring in an insolvencyproceeding under the domestic laws of the sovereign debtor appearsto be a novel concept. While there may be insurmountable constitutionalimpediments to such a proceeding under U.S. law, that maynot be the case under the law of other states. An era of unprecedentedjudicial and administrative cooperation in the insolvencies