I remember the moment as if it happened yesterday. The scene: the Dolder Grand Hotel, high in the hills above Zurich, Switzerland. It was 1986. I was the co-organizer of an important international monetary conference there dubbed "The U.S. Congressional Summit." On the agenda: the dollar, trade, and debt. Many finance ministry and central bank officials from the then--G-5 nations were in attendance.
Moments before the start of the conference, one of the sponsors, U.S. Senator Bill Bradley (D-NJ), and his staff approached me with a question. The senator had decided to offer a formal statement, but wanted me to be aware of its provocative nature and to ask my opinion. The subject of the statement: the need for immediate debt relief in the context of a growth agenda for what was then called the Third World.
My response to the senator: "Why not? Isn't this precisely what private conferences are for? To discuss provocative issues deemed too unsettling for the official discussions."
Senator Bradley's remarks proved to be explosive. This was the pre-cellphone era, so dozens of reporters ran for the pay phones. "Bradley's moving markets," one Reuters wag hissed frantically to me. phone receiver in hand. The senator had planted a powerful seed.
But here's the part of the story that's most interesting. I received a tongue-lashing for the senator's comments. Within moments, I found myself cornered in the hotel lobby by the U.S. Treasury officials in attendance. "This is highly irresponsible!" one shouted. A more junior official added: "How could you allow Bradley to make such a statement? This is dangerous. You're playing with fire."
My response: "U.S. senators don't ask for permission to offer their views. Besides, the Third World desperately needs a growth agenda. Nothing dangerous about that."
Senator Bradley's call for debt relief proved prophetic. Less than three years later, Brady Bonds, a market-oriented tool of debt haircuts, were being celebrated as part of an emerging market growth strategy.
Years later, after former U.S. Treasury Secretary Nicholas Brady (who was not yet in office at the time of Senator Bradley's prophetic Switzerland bombshell) left office, he graciously invited me to his retirement dinner at a downtown Washington restaurant. To my surprise, the same Treasury officials furious at Senator Bradley's "irresponsible" Switzerland remarks years before were the most vociferous in touting the success of Brady Bonds. Which goes to...