Argentina’s default and its expulsion of the IMF are two separate but related events.

It defaulted around 2001. Argentina agreed to pay back some of its debt (at the time $141 bn), just on more favorable terms.

In 2005 (2006?) , the IMF was shown the door. The dismissal was not a unilaterally made decision though; Argentina dipped into its central bank reserves to pay back the IMF. The IMF, wanting to save face, praised Argentina for paying it pack, but Pres. Kirchner, in reality was tired of their interference. But didn’t exactly ruin the country’s credit rating by getting shot of them.

You present the argument against defaulting from the perspective of the IMF. Since the IMF is the lender of last resort, eternal wrath will be bestowed on you when you send them packing. No other lender will want to risk lending to a country that has shown that much contempt to its creditors. In fact, you are obviously right, but you are very wrong as well.
The classic case of a country that goes to the IMF is a country that has been steadily borrowing more and more money in foreign currency, often to fund a domestic deficit of political will to sanitise the policies. Then suddenly an external shock exposes the frailty of the financial situation and all possible problems start hitting the country at once. Next thing you know they’re at the doorstep of the IMF and the IMF can be used as the bogeyman to implement some of the overdue changes.
I would argue that Iceland (much like Ecuador) does not fit the description of the classic case and would benefit greatly by defaulting to the Banking debts.
1. There are only a few countries that will fall victim to that decision, most other countries couldn’t care less.
2. It is not Iceland that has been borrowing all this money. It was Iceland based banks.
3. Though Iceland does have some political problems, it would be hard to argue that these problems are in any way defined by an overspending government that is too weak to rein in social benefits the country cannot afford.

About Ecuador. Ecuador has successfully argued that the lending terms they defaulted on were agreed on fraudulently. Since they bought back their debts (well below par) they are not in default anymore. Ecuador (and all sovereign debtors for that matter) HAS benefitted from defaulting on this bond. They have shifted the power in the creditor/debtor relationship significantly back to the debtors. Given the wave of sovereign defaults that will hit us in the coming 5 to 10 years, Iceland should consider its position very carefully and default should not be ruled out beforehand. Neither should it be the preferred path out of this misery. It’s a careful dance, and though Iceland is not leading it, neither should they allow being trampled on.

Lavitica – *cough* just means we’d rather not say the “I” word around here.

but what is the cough thing?

Lavitica. You should skip *cough* – then the title would make sense.
It is not English – it’s “internet” slang to express something you do when typing. So you can’t hear her coughing but you know she was coughing.
Alda just have an allergy to the word “Icesave” so she is coughing every time she has to type it or hear it
Comprender?

Argentina defaulted some time ago, and they still pay the price for that default. Ecaudor recently defaulted and I don’t think they’ve really benefited. Defaulting only really works if you have no need to borrow in the future. e.g. A very rich gulf state perhaps. But if you are in that position, the chances are , you didn’t need to be borrowing in the first place.

Nice video, BTW.