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Sheep, Goats, and Government Debts - Happy Lunar New Year, 1937 Edition

posted by Anna Gelpern

Sheep & Goat 1Like many others, I have been struggling to figure out whether the new lunar year is a Sheep or a Goat. I found the answer last week in the archives of the League of Nations Committee for the Study of International Loan Contracts, which spent four years from 1935 to 1939 investigating why sovereign debt was so screwed up, and what to do about it. During these four years, committee notables and their experts managed to foresee just about every 21st century sovereign debt controversy, from pari passu and feckless trustees to the epic and tiresome battle between contractual and statutory sovereign bankruptcy. The 1937 meeting minutes below also show a solid grasp of Odious Debt and sovereign lemons. Some governments might walk away from their debts just because, others have good economic or moral reasons not to pay, but the creditors cannot tell the two apart. The committee saw this as a problem of "telling the sheep from the goats," and ultimately concluded that there was not much to be done about it -- but not before considering contract reforms to let creditors monitor whether loan proceeds were used for the benefit of the country.

Bottom line: you cannot tell a sovereign sheep from a sovereign goat. And 1937 was the year of the [Ram] OX (aaargh!!! How many horned animals are there ...).

Sheep & Goat 2


Those who cannot remember the past... OR there are no new jokes.
Anna, I hope you are going to write up this history. It would be enormously valuable.

I am probably missing the joke, but 1937 was the year of the Ox.

Nope, that was no joke, but more horned animal confusion. Thanks for fixing it!

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