Argentina had a record-setting default in 2001, and was able to reach a settlement to issue new bonds this year. There is no such thing as "permanent" in the international debt markets. Someone will eventually be willing to lend you money, at the right price.
> Argentina had a record-setting default in 2001, and was able to reach a settlement to issue new bonds this year
15 years later (and arguably not in a much better condition than before). We shouldn't pretend a nation-state default has few/zero negative ramifications.
> Someone will eventually be willing to lend you money, at the right price.
You are right... but money gets a lot more expensive. It could very well be more expensive than riding out the temporary slump (which is largely tied to the petroleum markets from my understanding).
The real question is, as usual, what's the counterfactual in the case of Argentina? If they hadn't defaulted, would they actually be better off today? It's possible that, had they tried to avoid default at all cost, the lacking fundamentals would have locked them into a downward spiral. Sometimes, a default can be a liberating blow.
(I'm not saying that default was right for Argentina back then. The point is that you haven't presented any evidence that it was wrong, either.)
The government of Argentina voluntarily took the position that they would not settle with the outstanding debt holders. They could have settled 15 years ago and regained access to international debt markets right away.
Doing so would not have made the situation much better.
To an outside investor, Argentina is a lot more risky now that they've proven they're willing to default when things get rough. That kind of risk isn't impossible to overcome, but it's very expensive. For a struggling nation without a strong economy, foreign investments can be lifeblood.
Or a noose. Debt is a double-edged sword - it all depends on if it's structured in a reasonable fashion, and if it used in a productive manner that can pay down promised future payments.
> it all depends on if it's structured in a reasonable fashion
And the ability to structure reasonable debt is contingent on perceived risk to outside investors.
If Venezuela defaults and becomes very high risk, it's unlikely future debts will be favorable towards Venezuela, impacting Venezuela's ability to climb out of the hole, so-to-speak.
Markets tend to think ahead of that. At least I think Venezuelan debt is already now very high risk; after a default, I would not necessarily think it were higher - I would look at the policies adopted by the government and think whether they are consistent and responsible.
In other words, with the current government, it doesn't really matter whether they default or not. They are not very believable in any case.
That's kind of a special case that doesn't apply anymore: Argentina didn't have a collective action clause on its debt, meaning they could not force the holdouts to take the haircut even though 93% of the bondholders agreed to it. Virtually all debt issued by developing countries, and even a lot of developed ones, now has a strong CAC specifically because of the Argentina situation.
