Wall Street Journal
September 26, 2011
The top woman at the International Monetary Fund once said that if a country finds itself with a truly unbearable debt burden, then one way or another that debt will have to be restructured.
No, not IMF managing director Christine Lagarde, speaking over the weekend, but Anne Krueger, first deputy managing director of the IMF from 2001 to 2006, talking in Melbourne almost a decade ago.
Now Professor of International Economics at the School for Advanced International Studies at Johns Hopkins University, Ms. Krueger was speaking at a dinner early in 2002, and her speech then resonates down through the years.
“The first point to make is that sovereign defaults have been with us for almost as long as sovereign borrowing,” said Ms. Krueger.
“Indeed, if we stretch the definition a little, the first recorded sovereign default probably took place as long ago as the fourth century BC, when 10 of the 13 Greek municipalities in the Attic Maritime Association defaulted on loans to the Delos Temple. Showing secular as well as spiritual acumen, Delos subsequently chose to lend to private borrowers in preference to public authorities,” she added.
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