Aug. 1 (Bloomberg) -- The House Republicans, many of them
opposed to raising the federal government’s borrowing ceiling,
might take a lesson from the first sovereign debt crisis:
Spain’s default in 1575. What events more than 400 years ago
suggest is that it’s easy to ignite a dangerous chain reaction
in financial and credit markets and inflict lasting damage on
the economy.  Republicans today are playing the part of the
cities of Castile, whose delegates to the Cortes (the Spanish
parliament) opposed raising taxes to service King Philip II’s
long-term bonds.    Confluence of Interests    Finally, in
September 1575, Philip took a circuitous route to outmaneuver
the Cortes. He suspended payments not on the long-term debt, but
on the short-term debt, which was owed primarily to Genoese
bankers. The people cheered. Resentment against bankers ran as
high then as now -- perhaps higher, because the bankers were
foreigners. The upshot, however, was default and a full-blown
credit crisis.  Why did the Cortes and the