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Greece selling islands


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Well, prior instances of default (many years ago) did lead to the confiscation of land.  Usually the whole country.  But it did require extra expenditures in guns and men.  ;)


More seriously, Greece should just default. 

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Just as companies/people declaring bankruptcies lose their assets, isn't it logical  for Countries to follow the same rules?


I think the problem with this is that it isn't logical.


The bankruptcy code is created by a government.  What equivalent code is there for a sovereign entity?  Company's (specifically their boards) have specific rules of which stakeholders they are required to look out for.


Countries must look out for their people/citizens correct?... their creditors are only relevant in that having good relations with creditors helps the people.


So I'm not sure "logic" doesn't dictate some other path here for Greece; at a minimum, I'm certain that logic doesn't mean that all countries should pay off their debt regardless of costs.  It's an issue that is very situations specific.


If Greece feels they will be worse off as a country after default, then maybe selling islands is good.  If Greece feels that there will be an invasion or other act that directly challenges their national freedom or forcibly takes their assets, then maybe selling islands is good.  But in absence of that, maybe the best choice for their stakeholders was (and still is) default.


I'm not expert, but to me, buy country/sovereign debt is more about willingness to pay, than ability to pay for the above reasons.





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I'd argue there's a big moral difference as well: a country's assets are heritable, so forcing a sale means later generations pay for the mistakes of the current one.  Not so for companies, which simply die if the current generation screw up.


If the debt is actually secured by a specific island/asset, fine.  If not, default rightly penalises the capital providers for having done poor due diligence in lending to a profligate state without insisting on asset-backing.

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