Clash of the corporate titans

For a short but significant period of time on 10 August 2011, Apple Inc. was the world’s largest corporation by market capitalisation. Wresting the top spot from Exxon Mobil is no mean feat for a company that flirted with bankruptcy only 14 years ago. The ‘top spot’ in the global pecking order has become increasingly volatile this century, with no less than 14 changes in the last decade.

Recently there have been five main contenders for the top spot. This century opened with Microsoft in the lead, before being eclipsed by General Electric. GE kept the top spot for five years with the exception of a brief Microsoft renaissance between October 2002 and April 2003. Rising oil prices and the commodities boom would then see a decisive shift as Exxon Mobil vied with PetroChina for the top spot for the last half of the decade.

Although Exxon Mobil occupied number one position for most of this time, it was temporarily eclipsed by PetroChina’s stunning stockmarket debut in Shanghai. This saw PetroChina briefly valued at more than $1,000bn in November 2007 – the world’s first trillion dollar corporation.

The list was far more stable in the second half of the twentieth century. General Motors was by a considerable distance the world’s largest corporation by revenues for much of this period. Fortune 500’s list shows GM in the top spot from 1955 to 1980 (with the sole exception of Exxon’s strong performance in 1975), when it was replaced by Exxon.

Exxon and General Motors would continue to battle for the top spot throughout the 80s, with Exxon dominating until 1985 and GM in the lead in the second half of the decade. GM would remain the world’s leading corporation by revenue throughout the 1990s. The picture by market capitalisation then favoured the more profitable technology companies, with both General Electric and Microsoft leading.

Casting the net further back becomes more difficult. There are certainly some obvious big names that must have ranked as the most valuable economic concerns of their day. The earliest joint stock corporations became some of the world’s largest economic concerns, eclipsing even the size of their home markets and states.

The Dutch East India Company (Vereenigde Oost-Indische Compagnie or VOC) dominated the 17^th and much of the 18^th centuries, eclipsing its nearest rival, the English East India Company. VOC trade in Asia during this period equalled the rest of Europe combined.

British imperial expansion and success in India ensured that the VOC’s reign would end by the second half of the 18^th century. The VOC would eventually declare bankruptcy in 1799.  Its position was taken by the Honourable East India Company, a megacorporation with a quasi-executive and administrative function across the Indian sub-continent. This domination lasted until the company’s nationalisation and absorption into the British Empire after the catastrophic Indian Mutiny of 1857-58.

Just as surely as economic power shifted from the Dutch Republic to the British Empire at the end of the 18^th century it would begin its shift from the old world to the new at the end of the 19^th century. The history of USA’s corporate dominance begins with the railroads. In 1880 the Pennsylvania Railroad was the world’s largest economic concern, dominating transport in the burgeoning eastern seaboard and pushing out westwards. At one point its budget was larger than the US government’s.

US dominance continued with the age of tycoons and monopoly mergers – Carnegie Steel Company was subsumed in the United Steel Corporation (which was, on its creation, the first billion dollar corporation and by far the world’s largest). Standard Oil was so large that its constituent parts on break up would become Exxon, Mobil, Amoco, Chevron, Marathon Oil and Conoco – all vast concerns in their own right.

The brief spell at the top by PetroChina demonstrates the next shift in economic power, as Asia reasserts its central position in the world. The shift could, in reality, have already happened. Whilst ExxonMobil is the world’s largest company by market capitalisation it is eclipsed by the private, state-owned petrochemical behemoths in the oil producing countries. Valuations for Saudi Aramco extend to $7 trillion, whilst Rosneft, Gazprom, Sinopec and Petrobras must join it in any list of economic titans. 

Prime Ministers Out of Office - the top job en vacances

As buildings burned, shops looted and streets ceded to the control of rampaging youth, the country’s leaders were on holiday. With escalating civil disorder and public demands for action, an unfortunately essential quadrumvirate of the Prime Minister, Chancellor of the Exchequer, Home Secretary and Mayor of London were en vacances.

They soon returned. The Home Secretary Theresa May flew back on Monday 8 August, followed by David Cameron and Boris Johnson returning on Tuesday 9 August. Less essential figures also cut short holidays – Ed Milliband returned to the capitol on the same day as the Prime Minister.

Although the UK’s elite do not take quite as indulgent approach to August as many on the continent (this report highlights the EU’s deafening communication silence over the traditional holiday period), it is still traditionally a quieter time suitable for a fortnight’s holiday.

With modern technologies, Prime Ministers and the like are never really away from it all. A mobile phone and BlackBerry ensures constant telephonic and email connectivity. And, in reality, it has been the same for decades - the conduits for communication might change (think telephones, faxes, telexes and telegrams), but the principle is the same.

The propensity for Prime Ministers to take holiday is not a recent development. Parliamentary and government business was decidedly less demanding and more infrequent in the days of Walpole, Pitt and Palmerston. They could continue business at their country estates, relying on messengers and signals to keep them in touch with the capital.

In the modern age Gladstone set the pattern for Prime Ministerial travel. He was partial to recuperative holidays in the south of France, visits made all the more pleasant by being paid for by George Armistead. His trips to Cannes, Nice and Biarittz contrast with more ascetic trips to north Wales were chopping trees and lake swimming were the order of the day.

The availability of Royal Navy yachts created opportunities for long coastal trips, either around the waters of the UK or in the Mediterranean. As First Lord of the Admiralty, Winston Churchill had access to the luxury yacht the Enchantress. The vessel certainly placed a spell on him, and he spent over eight months onboard between late 1911 and summer 1914. His spell as wartime Prime Minister severely limited holiday opportunities, but he always had the escape of Chartwell, his beloved house in Kent.

Churchill was not the only political entranced by the Enchantress. It was on board the ship that the Prime Minister Herbert Asquith learnt of the death of Edward VII. This truncated trip was vividly outlined at the beginning of Dangerfield’s ‘the Strange Death of Liberal England’. The portentous passing of Haley’s Comet at the same time as the passing of the King is highlighted as an omen of turbulence ahead. The resulting hasty return to the UK demonstrates that the recall of Prime Ministers from holiday is at least a century old tradition.  

The sea was a more direct lure for Edward Heath, who married his political career with a life as a champion winning sailor. His yacht, the Morning Cloud, was his holiday respite, and he made history as the first sitting Prime Minister to compete in and win a yacht race by taking the Admiral’s Cup in 1971.

A series of Prime Ministers have made the Celtic fringe their holiday destination of choice. Lloyd George and Clement Attlee both chose the Llyn Peninsula in north Wales (Criccieth and Nefyn respectively). Lloyd George emulated Gladstone’s preference for earthy pursuits by tending to his garden and planting potatoes. Harold Wilson spent most of his holidays on the Scilly Isles of Cornwall. His connection to the place was so strong he was eventually buried there in 1995. Cameron and Thatcher have also holidayed in Cornwall. A staycation in his Kirkcaldy home in Scotland was the suitably austere location for Gordon Brown’s 2008 holiday.

Prime Ministers do not seem to have strayed much beyond the confines of Europe whilst in office, perhaps aware of the possibility of their imminent recall. This has not prevented more exotic or lengthy trips. The grave economic and political situation in 1936 make today’s outlook seem distinctly benign. This did not, however, prevent Stanley Baldwin taking a three month holiday in France, mostly at Aix-les-Bains. Even workaholic Margaret Thatcher managed to take a few breaks in the company of Lady Glover in Switzerland.

Harold Macmillan shared Baldwin’s ability to get away from it all by frequently spending the bulk of August and September at his wife’s family estate of Chatsworth House in Derbyshire. Tony Blair would echo Macmillan and Gladstone’s ability to get others to pay for holidays by some decidedly questionable stays at Hosni Mubarak's summer house in Egypt, Robin Gibbs' Florida mansion and several boltholes belonging to of Silvio Berlusconi.

So , as Cameron is pilloried for taking holidays at a time of rollercoaster share and bond prices, riots and urban unrest and the fall of Colonel Gaddafi it is perhaps worth remembering that everyone, even Prime Ministers, need time to unwind.

Tripoli - a score and more of invasions

Footage of fighters perched on jeeps and trucks fills rolling news channels. They are the victors, Kalashnikov feux de joie and a city en fête. The green, black and red flag of Libya’s National Transitional Council drapes armoured vehicles and tanks and is waved energetically in a hastily renamed Martyrs’ Square. The rebels have breached fortress Tripoli, and their army has taken over Gaddafi’s Bab al-Aziziya compound.

The speed of the rebels’ advance has surprised many in Libya and abroad, but fears of bloody street by street close combat have not been realised. Tripoli was the ultimate prize for the Transitional Council. It is not only the capital of Libya, but boasts a strategically favourable spot on the Mediterranean and dominates the oil rich coastal region. The city has a rich history of being won at the point of a gun, sword or spear, and the rebels’ advance is just the latest in a long line of military takeovers.

The city’s ‘foundation’ by the Phoenicians in the 7^th Century B.C. may actually have been the conquest of an existing pre-historic settlement. The Phoenicians were in turn displaced by the Greeks in c. 6^th Century B.C., extending their control of the north African coast from the town of Cyrenaica. The division of Libya between these historic provinces of Cyrenaica and Tripolitania has been a crucial factor of this year’s civil war, with the eastern province of Cyrenaica at the heart of the rebellion.

The city would then fall to the Carthaginians. No precise date is available for the expulsion of the Greeks, but there is an interesting legend that explains how the border between Carthage and the Greek colonies was established. A pair of champions from Carthage and Cyrene set off from their respective cities on the same day, each pair heading towards the other city. Their meeting place would set the border.

When the runners met, the Carthaginian pair (two brothers from the Philaenus family) had covered more ground and were accused of cheating by the furious Greeks. The Greeks would only consent to the boundary if the Carthaginians agreed to be buried alive at the spot. The brothers agreed, ensuring that the territory between that spot and Carthage would become subsumed into the Punic Empire. The border was marked by two pillars named after the brothers as the “Altars of the Philaeni”. The African territorial boundary between the Western and Eastern Roman Empires was later set on this spot, as was the division between the Libyan provinces of Cyrenaica and Tripolitania.

By the 2^nd Century B.C. the city was taken by Romans, and would remain in their rule as a key and flourishing Mediterranean trading port for 800 years. The city then fell to the Islamic tribes surging out of Arabia at some point in 642 – 643 A.D. It was initially part of the Egyptian based Fatimid and later Mamluk empires before passing to control of the local Berber Almohad empire and Hafsids kingdom.

Its strategic location meant it soon became a main base for the Barbary pirates, who had come to dominate Mediterranean shipping. The pirates had become such a menace to Christian shipping that the European superpower of the day, Spain, tried to drive them out. Tripoli’s nest of pirates was smoked out by a successful invasion in 1510 led by Don Pedro Navarro. The city would remain in Spanish hands for 13 years and was then passed to Knights of St. John in 1523 after their expulsion from Rhodes by the Ottoman Turks had left them otherwise homeless.

Although the Knights built up strong defences, including the earliest parts of the Red Castle (Assaraya al-Hamra), they were strangers in a foreign and hostile land and would eventually be driven out by their mortal enemies, the Ottoman Turks, in 1551. The Knights headed to Malta, and Tripoli was once again in Muslim hands. Although Tripoli would stay in nominal Ottoman control until the 20^th century, its grip on day to day power in the city ebbed and flowed.

History has long echoes, and the involvement of the US, Italy, the UK and France in this year’s NATO campaign will have given the historically aware Libyan pause for thought. The Americans were first militarily involved in Libya as early as 1801 when the First Barbary War saw the US Navy blockade the Port of Tripoli. US forces visited the Port of Tripoli again in 1815, bringing an end to all US tribute payments and a beginning to the final days of piracy in the region.

On 3 October 1911, the Italians attacked Tripoli, claiming their intervention was as liberator and protector. Libya was ceded to the Italians in the Treaty of Lausanne, but de facto control rarely extended much beyond the capital city until the 1930s. Fascist Italy saw Libya as integral to its plans to recreate a Rome-centred Mediterranean empire. Through the 1930s, Mussolini’s Italy endeavoured to convert Libya into an Italian province to be referred to popularly as Italy's ‘Fourth Shore’. Libya was dragged into the Second World War as part of the Italian Empire, and would become central to the north African theatre.

On 23 January 1943 the Allies captured Tripoli, and the British would remain in occupation of the city and country for the rest of the war and beyond. Independence would only come in 1951, but Libya remained a British protectorate - with both the UK and the US maintaining their military bases and control over the country's foreign and defence policies. This came to an abrupt end in 1970 when the British and Americans were ordered to leave by Colonel Gaddafi. History often has a way of coming round in full circles. 

Bursting the bubble

Inflation has been a hot topic in the UK since October 2009 when it broke free of the Bank of England’s target of 2% and starting soaring towards 5%. This week has seen an intense media focus on the issue, with stories highlighting CPI’s rise to 4.4% in July, regulated rail fares increasing by an average of 8%, hikes in gas and electricity prices of up to 19 and 16 per cent respectively and food prices racing ahead of inflation.

With the majority of earners facing a year of wage freezes or salary reductions, and unemployment rates increasing again, many people face difficult choices on what to sacrifice and how to economise. But is this recent period of inflation historically significant? It is certainly anomalous compared to recent years. Inflation last breached 4% in 1992 and stayed well below 3% until 2009. The rate was so benign that concerns over deflation were raised when CPI hit 0.8% in 2000.

This was the calm after a decidedly volatile 30 years starting in 1961. Inflation began a relentless rise in the sixties and became a major economic issue in the seventies, peaking at 24.2% in 1975. Between 1974 and 1981 inflation stayed firmly in double digits (with the sole exception of 1978’s calmer 8.3%), reaching 18% as late as 1981.

In the long view, wars have produced a rollercoaster of inflationary spikes and deflationary dips:

·         the Napoleonic wars saw prices leap by 36.5% in 1800 marking a UK inflation record. This was followed in 1802 by another record - a decline of 23%;

·         the Crimean War saw a spike in prices of 15.10% in 1854 followed by three consecutive years of deflation in 1857 – 1859;

·         prices more than doubled over the course of the First World War, and were followed by a period of deflation lasting from 1921 and 1933;

·         prices increased by 50% over the course of the Second World War – the rigours of rationing dampening inflationary pressures.

But, whilst Britain has endured a choppy history on prices, it has never come close to the turbulence and destruction of hyperinflation. Hyperinflation is defined as extreme or excessive inflation, and is understood by most economists to mean inflation at a rate of over 50 per cent per month (roughly, prices doubling every two months).

When hyperinflation is mentioned Weimar Germany springs to mind as the most extreme example of hyperinflation. This period produced the classic images of children playing with worthless blocks of banknotes, wheelbarrows being used to take enough money for a loaf of bread and people being paid twice daily to ensure they could buy something with their wages.

In December 1923, prices in Germany were more than 85,000,000,000% higher than a year earlier and the highest denomination bank notes had a face value of more than 1,000,000,000,000 marks. But this isn’t enough to earn it the title of highest ever recorded inflation.

Top 5 periods of hyperinflation

1.       Hungary, 1946 – highest monthly inflation of 13,600,000,000,000,000% with prices doubling every 15.6 hours. The response was to print a one hundred quintillion pengo note (20 zeroes) and, eventually, to scrap the pengo and replace it with the still extant florint.

2.       Zimbabwe, November 2008 – highest monthly inflation of 79,600,000,000% with prices doubling every 24.7 hours.

3.       Yugoslavia, January 1994 – highest monthly inflation of 313,000,000% with prices doubling every 1.4 days.

4.       Germany, October 1923 - highest monthly inflation of 29,500% with prices doubling every 3.7 days

5.        Greece, October 1944 - highest monthly inflation of 13,800% with prices doubling every 4.3 days.

(source: CNBC)

Further reading

·         When Money Dies, Adam Fergusson

·         An Inflation Primer, Melchior Palyi



Grandfather of the Euro

It was an ambitious project that would unify several European currencies into a single currency, a standard coinage that could be used throughout the member states. It would facilitate trade and tourism and promote peace and unity throughout the Union. It featured standardised coins, differentiated only by national symbols but otherwise boasting the same dimensions and weight. And, ultimately, it failed, members reverting to issuing their own coinage once more.

Despite the extensive press coverage of the troubles facing the Eurozone, this is not an obituary for the European Single Currency. It is the story of its direct antecedent, the Latin Monetary Union. On 29 December 1865 a monetary convention between France, Italy, Belgium and Switzerland concluded in Paris. The resulting treaty would be ratified on 19 July 1866 and came into force on 1 August 1866.

The treaty formed the Latin Monetary Union, which saw each member state agree to change their national currencies to a standard of 4.5 grams of silver or 0.290322 gram of gold and make them freely interchangeable. The Union was enlarged by the admittance of Spain and Greece in 1868 and Romania, Bulgaria, Venezuela, Serbia and San Marino in 1889.

 The collapse of the Latin Monetary Union has clear lessons for today’s Eurozone leaders. One reason for its failure was the tendency of member states to bend the rules and produce coinage that was not up to scratch. Greece was ejected from the Union in 1908 after reducing the amount of gold in their coins. The most scandalous abuse of the system was from the Papal States, whose treasurer, Giacomo Cardinal Antonelli, oversaw minting of far more coins than they were permitted under the system.

Another factor was the rigidity of rules imposed, specifically the Union's standard exchange rate of 15.5 ounces of silver to 1 ounce of gold. A combination of new finds and improved mining technology decreased the value of silver, making it profitable to exchange at the fixed rate for gold. Finally, the other great powers of Great Britain, Germany and the USA resented the French leadership of the Union. They preferred a more apolitical and neutral gold standard, a monetary system that would survive, more or less, until 1971.

So the Latin Monetary Union was doomed to failure and, in practice, this came with the outbreak of the First World War and the resulting fiscal pressures on its lead members. It survived on paper until the 1920s, and was finally officially laid to rest in 1926.

The Latin Monetary Union is not the only example of a currency union. In 1873, Denmark, Norway and Sweden founded the Scandinavian Monetary Union. This created a fixed exchange rate for a new currency, the krona, based on gold. Just like the Latin Monetary Union, the system collapsed under the pressures created by the First World War.

Two other main monetary systems still exists today:

·         the CFA Franc is the common currency of 14 countries in West and Central Africa (the west CFA Franc covers Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo whilst the east CFA Franc covers Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon); and

·         the Eastern Caribbean Currency Union (which sees the East Caribbean Dollar used in Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines).

There are also concrete plans for the Khaleeji (a common currency for Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates), the East African shilling (covering Burundi, Kenya, Rwanda, Tanzania, and Uganda) in the East African Community and the Eco, under the West African Monetary Zone  (Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone).

Further reading

• Money and Politics: European Monetary Unification and the International Gold Standard (1865-1873), Luca Einaudi
• Michael Bergmann, Stefan Gerlach and Lars Jonung "The rise and fall of the Scandinavian Currency Union 1873-1920"; European Economic Review 37.

The walls that divide us

The President and Chancellor of a unified Germany and the Mayor of a unified Berlin today marked the 50^th anniversary of the building the Berlin Wall. The 87 miles of the Antifaschistischer Schutzwall (or Anti-Fascist Protection Rampart in the official GDR terminology) split east and west Berlin for 28 years and became one of the most potent symbols of both the Cold War and, with its destruction, the fall of Communism.

The Berlin Wall as a dividing line has been consigned to history, and the few extant sections remain as tourist and remembrance sites. But there are plenty of other walls that continue to divide groups of people. In Northern Ireland, the peace lines, with their accompanying concrete walls, arrived in 1969 and continue to separate Protestant (or Loyalist) communities from their Catholic (or Nationalist/Republican) neighbours.

There are presently 53 officially maintained peace lines - 42 in Belfast, five in Londonderry, five in Portadown and one in Lurgan. Although many on both sides of the divide would like to see them come down, there has been no progress towards removal. Indeed, lines continue to be drawn and walls erected at new boundaries of sectarian tension.

Other dividing lines include:

• the United Nations Buffer Zone in Cyprus (otherwise known as the Green Line), running 113 miles following a roughly east to west path and dividing north and south Cyprus;
• the Moroccan Walls (or the Berm of Western Sahara) a series of barriers (mainly sandbanks) that separate the Moroccan-controlled areas from thosecontrolled by the Polisario;
• the Korean Demilitarized Zone running 160 miles along the 38^th parallel and providing a 2.5 mile wide buffer between the Democratic People’s Republic of Korea (North Korea) and Republic of Korea (South Korea). Seoul, the capital of South Korea and home to nearly 25 million, is only 30 miles from the DMZ;
• the Israeli West Bank barrier, a 470 mile wall dividing the Palestinian controlled West Bank from Israel. The different names it has been given reflect the conflict out of which it has emerged. In Israel it is called the separation fence, the security fence or the anti-terrorist fence. Palestinians refer to it as the racial segregation wall or the apartheid wall. Given even describing it as a fence or wall is politically loaded, many foreign journalists try to neutrally refer to it as a barrier.

Walls remain some of the best preserved relics of ancient civilisations. The Great Wall of China  and the frontiers of the Roman Empire  (including Hadrian’s Wall and the Limes (or boundaries) Germanicus and Saxonie) are perhaps the best known. Britain also has Offa’s Dyke  (roughly following a portion of the modern English-Welsh border),  the Antonine Wall (further north in Scotland than Hadrian’s Wall), Scots’ Dike (created in 1552 to mark the agreed border between England and Scotland in the Debatable Lands) and Wansdyke  (medieval earthworks in the West Country).

Screwing the moneylenders

The PIGS are squealing. Barely a day has passed this summer without rumour of sovereign debt default panicking already skittish markets. Greece would have defaulted without massive EU intervention, but even this hasn’t prevented fresh fear of Eurozone-wide contagion. France is the latest casualty, with shares in its financial institutions paying a heavy price this week.  

The spectre of sovereign debt default is not contained to the Eurozone. American politicians played a game of fiscal chicken as the US Treasury came within hours of being unable to service its multi-trillion dollar debt. Both sides eventually flinched, with emergency legislation being passed on 2^nd August. Xinhua, the Chinese news agency and voice of US’s biggest creditor, was harsh in its assessment, stating that:

“It is time for the naughty boys in Washington to stop chicken games before they cause more damages.”

It might seem that such financial crises are a product of our financially interdependent and globalised age. But debt crises and sovereign defaults stretch back to when such lending was extended to city-states, kingdoms and empires and when sovereigns were, well, sovereigns. Struzenegger and Zettelmeyer’s surprisingly accessible book on debt default reveals that the first recorded  sovereign debt default occurred in the fourth century B.C.

Ten out of the thirteen members of the Attic Maritime Association defaulted on loans issued by the Delos Temple. Whether these errant city-states were subject to divine wrath is not recorded, but their earthly representatives had a practical response – they took to lending to private concerns rather than public bodies. This default kicks off a long recorded history of financial irresponsibility which has come full circle with today’s Greek crisis.

Debt default was the exception to the norm of dealing with financial problems by currency debasement. The Roman denarius started life in the Republic with an almost pure 4.5 grams of silver. By the time of Nero this had reduced to 3.8 grams, and the fall of Rome was highlighted by the coin being substituted for a bronze issue in the reign of Diocletian.

Henry VIII found himself desperately short of money as he pursued foreign conflict in the 1540s. The short term solution was a wholesale debasement of English coinage beginning in 1546. By 1551, the silver content of the coins was barely a sixth of those minted in the reign of his father, Henry VII. The ‘golden age’ of Elizabeth was accompanied by a silver age for English coins, as quality and confidence in the currency were restored.

Currency manipulation was not a complete solution, however, and, ultimately, a day of fiscal reckoning would come. In 1345, Edward III of England repudiated his debt to the societies of the Bardi and the Peruzzzi in Florence, triggering a financial crisis that would ultimately cause the fall of these two great banking houses. Edward III owed 900,000 florins to the Bardi, and 600,000 to the Peruzzi  - vast sums roughly equal to $6bn in purchasing power terms or $240m based solely on today’s value of the gold at stake.

Defaults would become more common from the 16^th century onwards. France and Spain lead a dubious club of European debtors, defaulting eight and six times respectively between 1500 and 1800. The historical antecedents for the solvency of the PIGS are not promising. In modern times Portugal has defaulted five times (1837, 1841, 1845, 1852 and 1890), Greece four times (1826, 1843, 1860 and 1893), Italy once (1941) and Spain a whopping seven times (1820, 1831, 1834, 1851, 1867, 1872 and 1882).

The so-called Anglo-Saxon economies appear to be historically sounder bets – the UK and USA have never defaulted (although the 1840s did see public debt default in the USA as nine states either temporarily or permanently repudiated all or part of their debts (Maryland, Pennsylvania, Indiana, Illinois, Michigan, Arkansas, Louisiana, Mississippi, and the Territory of Florida form the roll of dishonour)).

All of this shows that sovereign debt defaults are nothing new. Even global financial interdependence is far from being a uniquely 21^st century phenomenon  - think of those 14^th century sun-baked Tuscans suddenly impoverished by royal command in a remote, rain lashed island far to the north. Perhaps the long view gives some hope – sovereign debt default has happened with surprising frequency, yet the world keeps turning.


Further reading

• Debt Defaults and Lessons from a Decade of Crises, Frederico Sturzenegger and Jeromin Zettelmeyer
• Debt Intolerance, Reinhart, Carmen, Rogo, Kenneth and Savastano, Miguel
• Sovereign Default and Repudiation: The Emerging-Market Debt Crisis in U.S. States, 1839-1843

• England under the Tudors,

   Geoffrey Rudolph Elton