We need to think about what institution should be in charge of such evaluations, and acknowledge that it should comprehensively consider the evidence and assessments provided by credit rating agencies, national fiscal councils, international financial institutions and organizations. A tough assignment, indeed. To conclude, I have to confess that, in a sense, I have cheated you. My Einaudi’s quotation was actually incomplete.
He not only said that “investors have the heart of a rabbit, the legs of a hare…”; he continued and said that they have “…la memoria di un elefante” (“the memory of an elephant”). This should be a reminder of the disruptive consequences of a default, which often permanently stains a government’s reputation.