Wednesday, October 15, 2014

Countries That Avoid Default

I am skimming Reinhart and Rogoff's This Time Is Different: Eight Centuries of Financial Folly which was popular a few years ago. Its premise is that however much we believe our current financial booms are structurally different from those of the past, and thus not likely to send us into a crash, they are all quite similar, whether the countries are wealthy or poor, advanced or simple, large or small.  Things appear different because A) Governments and businesses disguise what they are doing and B) we want to believe. In particular, debt drives downturns. The book is fine, and more readable than most economics. You will find both vindication and shame for your own political responses to economic events in your lifetime.  Readers here, more of the former.

There was an interesting quote in the preface which I pass along with only a slight comment after.
One of the fascinating questions raised in our book is why a relatively small number of countries, such as Australia and New Zealand, Canada, Denmark, Thailand, and the United States, have managed to avoid default on central government debt to foreign creditors, whereas far more countries have been characterised by serial defaults on their external debts.
I admit I'm curious about Thailand. I'm betting Steven Pinker might see something in the others.

1 comment:

Douglas2 said...

Thailand is an interesting case generally -- never colonized, and although there seems to be a coup every fortnight and a perpetual separatist insurgency, it has the world's longest serving head of state in the king who has been ruling since 1946, a government that has been stable since 1782.