This Time It's Not Different.

Byline: Kenneth Rogoff, Rogoff is professor of economics and director of the Center for International Development at Harvard University.

From the way money is now pouring into middle-income countries, like Brazil, China and Turkey, people must believe that we won't see another international debt crisis until the next sighting of Halley's comet. Has everybody forgotten about Mexico (1994); Thailand, South Korea, Indonesia and others (1997); Russia (1998); Brazil (1999); Argentina (2001); Turkey (2001), and Brazil (2002)? They shouldn't. According to a foreboding study issued last fall by the International Monetary Fund (when, incidentally, I was still chief economist there), at least a dozen other emerging markets have more debt than they can handle. Simply put, the average emerging-market country has a debt-to-income burden similar to that of a rich country, pyramided on lower exports and a tax base less than half as large. A recipe for catastrophe.

Yes, there are exceptions. Brazil, for example, has gotten pretty good at collecting taxes. And yes, the task of judging whether a country can outgrow its debt burden is not a science. Country defaults have complex social and political dimensions, and I have yet to see any framework that can convincingly name the time or place of the next big crisis. But one didn't have to be Nostradamus to foresee Argentina's recent collapse. Facing persistent budget deficits and volatile world prices for its goods, Argentina fought in vain to maintain a rigid currency peg to the dollar. Only the United States can print dollars.

Are the investment geniuses of the world concerned? It is hard to see it in the interest rates they are charging corporations and governments in emerging markets. When Brazil was on the brink of collapse in August 2002, and before it was bailed out by a $45 billion loan from the IMF, it had to pay a whopping 24 percent premium above U.S. Treasuries. Now? Just above 4 percent extra, not that much larger than the spread many individuals pay on their mortgages. Does that make sense, given these countries' checkered credit histories? Let me tell you, it is a lot easier for the local bank to seize your house or car than it is for Citibank to get to a deadbeat sovereign debtor.

Some say this time is different. Exchange rates are more flexible, global markets are deeper--something akin to Fed chairman Alan Greenspan's remarkably sanguine view about why the world shouldn't worry about voracious American borrowing. ...