History of default in 83 countries reveal Greece not alone in facing crises

ANADOLU AGENCY
WASHINGTON
Published

As Greece heads toward a referendum to decide the fate of its bailout negotiations, a survey over the past two centuries reveals that many other countries have also faced defaults, especially during the periods of the two world wars in the last century. Eighty-three countries including the largest economies in the world such as the U.S, Germany, Japan and the U.K. have lapsed into default within the last two centuries, which shows it is not a rare thing for governments to go bankrupt. While the fact that Greece is faced with lapsing into default once more tops the agenda of global markets, it also brings to mind the bankruptcy experiences of other countries. Whereas 83 countries have gone into default at least once, failing to meet their internal or external financial obligations since the 19th century, only four developed countries - Australia, New Zealand, Belgium and Canada - managed to pay their debts.

According to a working paper released by the U.S.-based National Bureau of Economic Research (NBER) in March 2010 titled "This Time is Different Chartbook: Country Histories on Debt, Default and Financial Crises," the U.S. itself braved domestic defaults at least four times since 1790. The country's first default occurred in 1790 when a crisis in the banking sector arose. Between 1841 and 1842, nine of its states defaulted, and 10 states defaulted between 1873 and 1884. The U.S. also defaulted in 1933 when U.S. Treasury bonds were set to a specific price of gold, but did not have the money to do so. Moreover, the U.S. faced banking crises at least 15 times between 1814 and 2007. Some experts fear that the U.S.'s public debt may exceed its gross domestic product (GDP) by 2039 and once again face a threat of default.Germany, currently the fourth-largest economy in the world and the biggest in the European Union, faced external defaults at least four times in 1807, 1812, 1850 and between 1932 and 1953. There was also a domestic default at least one time in 1948. The country faced banking crises at least eight times between 1857 and 2007, the NBER data revealed.

The current economic success of the country is due to the tight fiscal policies it implemented after World War II.

The United Kingdom, the world's fifth-largest economy, faced domestic defaults at least four times in 1822, 1834, between 1888 and 1889 and in 1932. It faced banking crises at least 12 times between 1810 and 2007.

The countries, which defaulted only one time in the last two centuries, are France with an external default in 1812, Denmark in 1813, the Netherlands from 1802 to 1814 and Sweden in 1811.

China, which is currently one of the largest economies, faced external defaults twice between 1921 and 1936 and from 1939 to 1949, and domestic defaults in 1921 and 1932. It also faced banking crises 10 times between 1863 and 1998.

Japan faced external default between 1942 and1952 and domestic default from 1946 to 1948. It faced banking crisis eight times between 1872 and 1992.

The late Ottoman Empire Turkey faced external defaults eight times from 1876 to 1881, 1915- to 1928, 1931 to 1932, 1940 to 1943, 1959, 1965, 1978 to 1979, 1982 and 2000 to 2001. It faced banking crisis in 1931, 1982, 1991 and 2000, according to the NBER data.

Venezuela, Peru and Ecuador defaulted a total of 10 times each. Just behind them were Brazil, Mexico, Uruguay, Chile and Costa Rica with a total of nine defaults in the last 200 years.

Argentina came in third place with eight defaults while Colombia, Dominican Republic, Guatemala and Paraguay each experienced seven defaults.

If the Greek referendum eventually decides that the country should break away from its bailout talks with creditors, it would not be the first time that Greece faces a default. The country faced external defaults five times from 1826 to 1842, 1843 to 1859, 1860 to 1878, 1894 to 1897 and 1932 to 1964. It also faced domestic default from 1932 to 1951 and banking crisis twice before in 1931 and 1991.

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