februari 19, 2010

If Greece wants my money then I want their islands!

It looks like Greece has some serious problems (solidity problems as well as liquidity problems). Unfortunately, for me as a Swede, Greece is part of the EU and unfortunately for countries like Germany, Greece is part of the euro-area. This means that we feel the need to help them out somehow (financially). And not only out of solidarity but also out of pure old egoism; put simply, we may very well go down together with Greece since a collapse of Greece might spook the market into forcing other larger euro-countries like Spain and Italy down on their knees.

Now, of course, this risk is much smaller for Sweden than Germany since Sweden is not in the euro-zone. Therefore, realistically speaking, we should not feel the same urge to support Greece financially as Germany, Finland or France. In fact, I doubt that we should help them out at all. The moral hazard situation created by such an intervention would make the US led bail-out of the banking system look like a stroll in the park.

So, my suggestion is the following: why on earth is no-one mentioning the possibility of Greece selling off some of its assets? I mean, that´s what a company on the verge of bankruptcy would do. It would start to sell off parts to be able to solve its liquidity problems. And then, when that problem is solved, it would turn to long-term survival and solidity issues. Why shouldn’t any sovereign (at least if it is not in the eueo-zone) intended to help out Greece demand the same thing? If they get my tax money, I want something in return! I have not got anything out of my earlier EU transfer payments to countries like Greece. The only thing I got was expensive vacations with inflated euro-prices paid with deflated Swedish currency. Enough is enough!

So my suggestions are the following:
1) Either they get an injection of equity and I get some of their future tourist income through direct ownership in hotels, beaches and olive-oil farms. Or perhaps their banks and insurance companies. Or, even more exotic, I get parts of the future tax payments. In that way there would be the added advantage of the force of market discipline on Greek tax collection. That seems to be needed if one should believe what is written in the media. And Greek governments seem to be familiar already with borrowing now and letting their kids pay back in the future (the Goldman deal...)
2) Or they get a fully secured loan backed by hard and carefully ring-fenced assets. If the Greeks want to use securitization as a tool the government seems to be familiar with that already and they also seems to have the required fixed-income Goldman connections lined up.... :)