Wall Street Journal
September 28, 2011
The blade of sovereign default is hanging unsteadily over the neck of the euro zone. Greece will be first – of this investors are certain. But fears are rising that Ireland and Portugal will follow soon after.
So what should be done?
What’s past is prologue: History is littered with sovereign defaults. For some answers, let’s go back — WAY back.
The first recorded sovereign default appears to have happened in, um, Greece, according to Foreign Bonds: An Autopsy, by Max Winkler and Thomas H. Healy. (In fairness to Greece, the first recorded instances of many things are in Greece. )
The year was around 400 B.C.; Plato was an up-and-coming young philosopher; and Dionysius of Syracuse, a noted tyrant, had a problem: He’d borrowed too much money from his subjects.
Dionysius’s solution was to appeal to the solidarity of tribes all across Europe to pool their money into a giant pot that would repay Dionysius’s debts.
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