Today’s debt crises among European sovereigns and US underwater mortgage holders both have much in common with a similar chronicle of debt foretold in Argentina a decade ago: the answer that involves the least amount of pain is a swift restructuring. In “Chronicle of a Debt Foretold,” a new paper for the World Economic Roundtable, organized jointly by the World Policy Institute and the Economic Growth Program of the New America Foundation, I argue that the answer is similar to the stitch in time that was proposed for Argentina, on which policy makers failed to act, modeled on the Brady Plan debt restructurings that resolved the 1980s sovereign debt crisis. We need a new Brady Plan for both the troubled European sovereign debtors, and for US underwater mortgages, before we lose another decade, as we did in the 1980s.
Posted on by Michele