Greece is at the center of the sovereign debt crisis that is worrying many investors and increasing the volatility of stock markets across the world. This is not a new phenomenon for that country, which has defaulted on its external debt many times since achieving independence at the beginning of the 19th century. Here are some facts that all investors should know about the history of Greek sovereign debt defaults.
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Ancient Default The first recorded default in Greek history occurred in the fourth century B.C., when 13 Greek city states borrowed funds from the Temple of Delos. Most of the borrowers never made good on the loans and the temple took an 80% loss on its principal.
Five Times
Greece has defaulted on its external sovereign debt obligations at least five previous times in the modern era (1826, 1843, 1860, 1894 and 1932). The first episode occurred in the early days of that country’s war of independence, and the last default was during the Great Depression in the early 1930s. The combined length of period under which Greece was in default during the modern era totaled 90 years, or approximately 50% of the total period that the country has been independent. (For related reading, see Recession and Depression: They Aren’t So Bad.)
Although many might consider this level of default to be excessive, Greece is nowhere even close to the top of the list. Venezuela and Ecuador, with 10 defaults each, share the (dis)honor of being the greatest serial defaulters of the modern era.
