Emerging-market bond investors are being caught
in something of a pincer action. Impinging from one side is
the IMF: hell-bent on destroying their contractual rights and
making it easier for countries to default. Closing in on the
other side are the countries they've been lending to, and the
inevitability that they're going to default increasingly
frequently. International bonds, in the wake of Ecuador and
Argentina, no longer have an aura of inviolability, and rating
agency Standard&Poor's says that sovereign bond defaults
are going to rise steadily for the next decade.
More profoundly, bond investors have suddenly found themselves
bereft of the power and influence they wielded throughout the
1990s. Back then they had no need of...
