Politicians and scholars are fond of extolling the study of history, invoking the oft-quoted words of Santayana, “Those who cannot remember the past are doomed to repeat it.” Yet what historical wisdom should one remember? The teachings of history are often difficult to fathom because each analyst's theoretical and ideological preconceptions color the interpretation of events. At the extreme, some have found history's lessons so elusive that they come to agree with Hegel, who noted that “What experience and history teach is this – that people and governments never have learned anything from history, or acted on principles deduced from it.”

While the study of the history of debt crises yields no absolute truths, there is little doubt that ignorance of historical patterns has proved costly. Almost without exception, modern bankers have made mistakes as a result of their unfamiliarity with the turbulent history of international lending. Few lenders in the 1970s, for example, knew that sovereign countries had frequently defaulted on their debt payments in the past. Many American bankers even remained unaware that several American states defaulted in the nineteenth century. Hence, Hegel notwithstanding, some attention to historical events would appear to be in order.