If you don’t know who Carmen Reinhart is, she wrote a book with Kenneth S Rogoff This Time is Different Eight Centuries of Financial Folly.
She is speaking at the 10th INFINITI conference in Dublin Ireland. The conference is on International Finance. Megan Greene and economist whom I follow on Twitter and is doing an excellent job keeping me up to date on what is going on in Europe with their crisis.
The following is a sampling of the tweets from Megan about Carmen’s talk:
- Carmel Reinhart prefaces her address with “nothing I’m about to say is going to be uplifting, I just want to warn you”.
- Carmen Reinhart: I know of hardly any debt crisis that hasn’t involved a restructuring
- Reinhart: Macroprudential regulations is just a politically correct way to say capital controls. Fin repression isn’t sinister.
- Reinhart: Between 1945-79, real interest rates for 22 leading economies were negative over 50% of the time.
- Reinhart: Financial repression helped reduce public debt in the UK, Oz
- Reinhart: In terms of debt resolution in advanced economies, the points of reference are WWI, the 1930’s and WWII
- Reinhart: Growing your way out of a debt overhang has almost never worked. There is almost always a debt restructuring and fin repression
- Reinhart: In 1932, the only country to repay its debts to the US was Finland. The US then abrogated the gold clause. Default is not uncommon
- Reinhart: Once public debt exceeds 90% of GDP, the impact of the debt overhang on growth is significant
- Reinhart: The avg duration of debt overhang is 23 years.
- Reinhart: Part of the solution to the debt crisis is going to involve capital controls that won’t be called capital controls
- Reinhart: Ireland unlikely to manage to get out of this crisis w/o a debt restructuring. Gross external debt for Ireland is huge
- Reinhart: On external debt, can’t do much fin repression. Allow inflation to accelerate and keep interest rates low. Works for domestic debt
You don’t write a book 800 years of financial events and not become somewhat of an expert. I will say that there is a lot to be digested even in a 140 character limit. The western world is going to be changed by what happens in Europe with their fiscal crisis just as ours is having a profound impact on our society.