Among those in First Things‘ offices, our senior editor David Goldman goes on The Kudlow Report to do the heavy lifting on economics, and things like guessing which way the Euro is going to break are way beyond my remit.
Still, there are no good solutions to the Greek financial crisis for the European Union, and I’m convinced things are going to get very, very bad in Greece—bad as in street violence, political gridlock, major bond defaults, and even civil war.
February 24th, 2010 | 11:39 am
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February 24th, 2010 | 2:18 pm
Greece is the most homogenous country in Western Europe and yet the only one to have a civil war since WWII. This shows how hot-headed and ideological the Greeks are, compared to other places in Europe where divisions tend to be ethnically or religiously based rather than ideological to the point of warfare.
The only thing that might prevent civil war in Greece, though, is the amazingly geriatric age profile of the country. That is unless the Greeks are so hotheaded that even seniors with wheelchairs and canes will go after eachother. Stay tuned.
February 24th, 2010 | 5:30 pm
Ellen writes: The only thing that might prevent civil war in Greece, though, is the amazingly geriatric age profile of the country. That is unless the Greeks are so hotheaded that even seniors with wheelchairs and canes will go after each other.
A good line. I’m not hopeful, though, that Greece comes through this well.
February 25th, 2010 | 12:34 pm
Russia defaulted on its debt in 1998 and Argentina defaulted in 2000. Please recall also that Argentina suffered between 1999 and 2004 a contraction in output of 19% or so. Neither suffered a generalized civil war and Russia’s peripheral insurgencies had other causes. You and Goldman need to get a grip.
February 27th, 2010 | 12:52 pm
http://mitpress.mit.edu/books/chapters/0262195534chapm1.pdf
The money quote:
Given the lack of formal creditor coordination, it is perhaps surprising
that the 1998–2005 debt restructurings were undertaken relatively
quickly. Most of them were undertaken in a matter of months (only
Argentina’s most recent debt restructuring, which lasted for about
four-and-a-half years from default until settlement, took more than
two years). This was achieved through a novel approach, namely,
take-it-or-leave-it offers to exchange the existing bonds for new ones
with payment streams of lower present value. The offers were preceded
by informal discussions with creditors, but rarely formal
negotiations. This worked well as long as the terms of the exchange
offer—usually designed with the help of an investment bank as
financial advisor—were sufficiently attractive enough to invite wide
participation, given the alternatives faced by creditors (i.e., uncertain
litigation or sale at depressed prices).
It is not like this sort of thing has never happened before.
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