If you want to go back to the roots of Greece’s financial crisis, you could always start with Philip II of Spain. Born in 1527; acceded to the Spanish throne in 1556; defaulted on the national debt in 1557, 1560, 1575 and 1596; died in 1598. Now there’s a sovereign who knew how to renounce sovereign debt. Philip would leave an Argentine finance minister standing.
The path of default he laid down has seen heavy traffic across the centuries from monarchies and republics, democracies and dictatorships. Europe – and increasingly the world – is now watching the chaos in Greece and wondering if this is a Lehman Brothers of the public sector. So it is striking that after all this time the world still treats restructuring, or the rewriting of sovereign debt contracts, as an act of extraordinary calamity.
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