f285b50246f86f880bda6e01_ms5815c.jpg Margaret Scott

America’s First Debt Crisis

Both Europe and America should learn a lesson from US history: lost in the haze of patriotic veneration of America’s founding fathers is the fact that they created a new country during – and largely because of – a debt crisis. Might today’s crises one day be seen as a similar moment of political creativity?

CAMBRIDGE – The West is ensnared in a debt crisis. The United States, as everyone knows, came perilously close to defaulting on August 2, and Standard & Poor’s downgraded US debt from AAA on August 5. In Europe, the outgoing head of the European Central Bank recommends more centralized fiscal authority in Europe in order to deal with likely defaults by one or more of Greece, Portugal, and Spain.