William R. “Bill” Rhodes
is the retired Citibanker who turned himself into a legend when he almost single-handedly negotiated solutions for the various Latin American debt crises during the 1980s, solutions which worked. Following that, and until his retirement from Citibank a couple of years ago, he had been directly involved in just about every debt crisis anywhere in the world.
The American bank on whose behalf I negotiated the Argentine debt in the mid-1980s was not on the Steering Committee but since it was Argentina’s 8th largest creditor, I was intimately involved with the workings of the Steering Committee and of Bill Rhodes who headed it. Everything I know today about sovereign debt crises I learned then.
I recommend to interested readers that they check out Youtube for videos featuring Bill Rhodes. Here are two very good ones (but there are many more on Youtube):
Tea with William Rhodes (The Economist)
William Rhodes interviewed by Steve Forbes
Let me cite a few quotes from Bill Rhodes:
“You’ve got to have a plan, first of all, that you can sell to your own population because if you don’t have the population of your country behind you, it’s not going to work”.
“Austerity is just one part of reform. If you don’t have a pro-growth program, it’s not going to work. In Greece, they haven’t been able to reform the tax system (to increase revenues), they haven’t started the privatizing; etc. All they have been doing is ‘cutting’”.
“In Europe, they have wasted 18 months because it was very obvious, when Mr. Papandreou came into office, that Greece had a major problem with the books. Paul Volcker taught me early on that time is of the essence in a debt crisis because the clock is always working against you”.
“Time works agaist you in crisis. There has been too much bickering between Central Bank heads, the ECB, the bureaucracy in Brussels, various Finance Ministers publicly over what to do and what not to do. And finally they are bringing the private sector into it, a year late”.
“I tell you what Greece needs. Greece needs time and it also can’t afford those interest rates”.
“As regards privatizations, the Greeks simply have to move on it because otherwise the program won’t work”.
My understanding from people near Bill Rhodes is that he had offered EU-elites his advice from the start but it was rejected on the grounds that the experiences in emerging countries would serve as no basis for solving problems within the Eurozone.
My sense is that the Eurozone’s debt problems would be well under control by now if Bill Rhodes had been the EU’s chief negotiator from the beginning. But then, it’s never too late and he could/should be involved even now.