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Greece remains at the center of the European sovereign-debt crisis. As its economic recession deepens because
Download Audio as MP3 of the International Monetary Fund's austerity measures, some are calling for Greece to default on its debt. Panelists at this event will discuss how advisable that course of action is in light of Argentina's unfortunate experience with defaulting in 2001.
|2:00||Panelists:||Whitney Debevoise, Arnold & Porter LLP|
|Arturo Porzecanski, American University|
|VINCENT R. REINHART, AEI
|Hal Scott, Harvard University|
|Moderator:||DESMOND LACHMAN, AEI|
WASHINGTON, NOVEMBER 18, 2010--Panelists were divided about whether Greece would default on its debt and exit the eurozone Thursday at an American Enterprise Institute event. Despite suffering from large domestic and external imbalances, Greece's membership in the eurozone prevents it from exporting its way out of the crisis, just as the convertibility plan pegged to the dollar prevented Argentina from doing so in 2001. Vincent R. Reinhart pointed to Argentina's significant recovery following its debt restructuring and said that a Greek default was not only inevitable, but desirable. The other panelists concluded that Greece would be able to avoid default and continue in the eurozone. Arturo Porzecanski deemed the comparison with Argentina inaccurate, noting the influence of public confidence, the European countries' willingness to continue lending to Greece, and the fact that debt and deficit ratios are not the best indicators to predict defaults. He said Greece can avoid disorderly default by avoiding the path Argentina took. Hal Scott said that leaving the euro is not a practical option for Greece and suggested alternatives, including getting additional support from the European Financial Stability Facility, restructuring debt through the Sovereign Debt Restructuring Mechanism, and getting further bailouts from the European Central Bank. Finally, Whitney Debevoise noted that Greece would not be able to get out of the eurozone as easily as Argentina exited its currency peg, as the majority of Greek holdings are debts issued under Greek law.
Whitney Debevoise is a senior partner at Arnold and Porter LLP's international practice, with particular involvement in international financial transactions, public policy, international arbitration, multijurisdictional litigation, banking, and international trade. He rejoined Arnold & Porter in 2010, having served as U.S. executive director of the World Bank since 2007. Mr. Debevoise has extensive experience in major international financial transactions and the capital markets, including five Brady Plan restructurings, numerous major privatizations, Eurobonds, and medium-term note programs. As U.S. executive director of the World Bank, a presidentially appointed and Senate-confirmed position, he represented the United States on the boards of directors of four institutions of the World Bank Group: the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, and the Multilateral Investment Guarantee Agency. Mr. Debevoise has written articles on securities regulation, World Trade Organization dispute resolution, debt restructuring, international banking, U.S. export controls, and sovereign immunity. He has lectured at the Harvard and Yale law schools, the Tuck School of Business at Dartmouth, and the Hungarian Institute for the Training of Bankers.
Desmond Lachman joined AEI as a resident fellow after serving as a managing director and chief emerging-market economic strategist at Salomon Smith Barney. Previously, he was deputy director in the International Monetary Fund's Policy and Review Department and was active in staff formulation of the organization's policies toward emerging markets. Mr. Lachman has written on topics such as economic policy, fund arrangements, monetary reform, import restrictions, and exchange rates. At AEI, he studies major emerging-market economies and the role of multilateral lending institutions.
Arturo Porzecanski is distinguished economist-in-residence at the American University's School of International Service. He is an expert in international finance, emerging markets, and Latin American economics and politics. Mr. Porzecanski taught at Columbia University, New York University, and Williams College, but he spent most of his professional career working as an international economist on Wall Street. Previously, he was chief economist for emerging markets at ABN AMRO Bank, chief economist for the Americas at ING Bank, chief emerging-markets economist at Kidder, Peabody & Co., chief economist at Republic National Bank of New York, senior economist at J. P. Morgan Bank, research economist at the Center for Latin American Monetary Studies in Mexico City, and visiting economist at the International Monetary Fund. Mr. Porzecanski provides consulting services to legal and financial firms, as well as U.S. government agencies and multilateral institutions. He is also a dispute resolution arbitrator for the Financial Industry Regulatory Authority.
Vincent Reinhart is a resident scholar at AEI. He is a former director of the Federal Reserve Board's Division of Monetary Affairs, and has spent more than two decades working on domestic and international aspects of U.S. monetary policy. He has held a number of senior positions in the Division of Monetary Affairs and the Division of International Finance and served for the last six years of his Federal Reserve career as secretary and economist of the Federal Open Market Committee. Mr. Reinhart worked on topics as varied as economic bubbles and the conduct of monetary policy, auctions of U.S. Treasury securities, alternative strategies for monetary policy, and the efficient communication of monetary policy decisions.
Hal Scott is the Nomura Professor and director of the Program on International Financial Systems at Harvard Law School, where he has taught since 1975. He teaches courses on capital-markets regulation, international finance, and securities regulation. Mr. Scott's books include the law school textbook International Finance: Transactions, Policy, and Regulation (Foundation Press, 2008) and International Finance: Policy and Regulation (Sweet & Maxwell, 2007). His recent articles include "Internationalization of Primary Public Securities Markets Revisited,” in Capital Markets in the Age of the Euro: Cross-Border Transactions, Listed Companies and Regulation (Kluwer, 2002); and "International Finance: Rule Choices for Global Financial Markets,” in Research Handbook in International Economic Law (Elgar, 2007). Mr. Scott is the director of the Committee on Capital Markets Regulation, a nonprofit organization formed to research and recommend for improvements in the regulation of U.S. capital markets. He is also an independent director of Lazard Ltd., a past president of the International Academy of Consumer and Commercial Law, and a past governor of the American Stock Exchange.