Eastern Europe's Past Disaster Shows Why Fears Of Greek Default Are Way Overblown

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FOR anyone from the ex-communist world with a medium-term memory, the frantic efforts under way to save Greece (and the other wobbly southern members of the euro zone) are rather puzzling.

For a start, what is so bad about default and restructuring? In the 1990s Russia restructured $32 billion worth of Soviet debt into PRINs and IANs (both are now stored in the Museum of Financial Archaeology and may be viewed on application to the curator). In 1998 it defaulted on those debt instruments. People said Russia’s financial credibility would never recover. One banker said he would rather eat nuclear waste than invest in Russia again. But within a couple of years, Russia was flavour of the month.

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