Thursday, March 3, 2011

Harvard's Rogoff: Greece, Ireland, Portugal, and Spain to Restructure Debt, Default

Harvard's Kenneth Rogoff is one more on the camp that Greece, Ireland, Portugal - and Spain's -  debt restructuring is unavoidable.

Rogoff is currently the Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University.

“I do think the eventual restructuring of two or three countries -- Greece, Ireland, Portugal -- is inevitable,”
“may be called something else, for face- saving reasons.”
“It’s inescapable to have public and/or private debt restructured in all four countries” “The risk of waiting too long is that it gets bigger and it costs you more.”

“If Spain were to have a restructuring of central government debt, I don’t think it would end there”

“Spain is just too big.”

Portugal in just weeks

He says that Portugal will finally accept a financial bailout within the next few weeks.
As for Greece "... a default will be difficult to avert.”

Kenneth Rogoff  is the author of the paper “This Time Is Different,”, followed by a book of the same title:
  • Greece has defaulted or rescheduled its debt five times since 1829.
  • The leader of the pack however is Spain: 13 times since 1476
  • Germany and France have both done it 8 times
  • The U.K. has never done it since William the Conqueror invaded in 1066
  • Greece, has existed in a “perpetual state of default” since its independence, the economists write, having spent 50.6% of those years in default or rescheduling.
  • Russia is next highest, with 39.1% of years spent as a bad debtor after defaulting or rescheduling five times.
  • Hungary has defaulted or rescheduled seven times since gaining independence in 1918.
Their conclusion is "concluding that that countries like Hungary and Greece will never default again because 'this time is different due to the European Union' may prove a very short-lived truism.”

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