Today’s debt crises among European sovereigns and US underwater mortgage holders both have much in common with a similar chronicle of debt foretold a decade ago.
In March 2001, not even a year before Argentina devalued its currency and stopped paying its foreign obligations, it was clear that the country was headed for disaster. Despite an IMF bailout package only months earlier, its benchmark bonds were trading at well under 80 cents on the dollar and yielding more than 900 basis points over US Treasury bonds, reflecting investors’ lack of confidence in the country’s finances.