WASHINGTON
As Greece heads towards a referendum to decide the fate of its bailout negotiations, a survey over the past two centuries reveals that many other countries also faced defaults, especially during the period of two world wars in the last century.
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 Chart book: 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, whereas between 1873 and 1884, 10 states defaulted.
The U.S. also defaulted in 1933 when the U.S. Treasury bonds were to pay gold at a specific price, 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 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; also there was a domestic default at least one time in 1948. Moreover, 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.
United Kingdom, the world’s fifth-largest economy, faced domestic defaults at least four times in 1822, 1834, between 1888 and 1889, and 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 (external default in 1812), Denmark (1813), the Netherlands (1802-1814) and Sweden (1811).
China, which is currently one of the largest economies, faced external defaults twice for the periods 1921-1936 and 1939-1949; and domestic defaults in 1921 and 1932. Also, it faced banking crises 10 times between 1863 and 1998.
Japan faced external default in the period 1942-1952 and domestic default in 1946-1948. It faced banking crisis eight times between 1872 and 1992.
Turkey faced external defaults eight times in the periods 1876-1881, 1915-1928, 1931-1932, 1940-1943, 1959, 1965, 1978-1979, 1982 and 2000-2001. It faced banking crisis in 1931, 1982, 1991 and 2000, according to the NBER data.
Venezuela, Peru and Ecuador attracted default 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.
Moreover, if the Greek referendum eventually decided that the country should break away from its bailout talks with creditors, then this would not be the first time that Greece would face default. The country has faced external defaults five times in the periods 1826-1842, 1843-1859, 1860-1878, 1894-1897 and 1932-1964. It also faced domestic default in the period 1932-1951 and banking crisis twice before in 1931 and 1991.
The Greek parliament early on Sunday voted by a large majority to hold a referendum on continuing the country's bailout according to the terms set by the Eurogroup, the EU, the European Central Bank, and the International Monetary Fund. The reaction from Greece's creditors was to reject any extension of the bailout beyond Tuesday.Greece is due to pay $2 billion to the International Monetary Fund by Tuesday.
