Could the Greek citizens solve the governments debt problems by buying Greek bonds? Is that allowed by the EU?
The Greek national debt is estimated at over €343,000,000,000.
The Greek population is roughly 11,000,000.
So sure, if every man, woman and child happens to have €31,182 available to invest immediately in Greek bonds, that would work.
Of course the average yearly income in Greece for a one income couple with two children is €24,201, so that is likely an impossible target to meet.
They wouldn’t need to buy the entire debt. Do we know the annual payment schedule?
I’m not sure it’s allowed by the laws of physics. To make a sizable dent would need about 100 billion Euro, and there are are only 11 million Greeks.
Right, so that would only be about €9,090 per Greek citizen.
But again, if the annual income for a family of four is €24,201, that’s more than a third of the family’s annual income. How many people can just invest a third of their family income on short notice?
Maybe they could rent out the Parthenon for billionaire parties.
Or what does the U.S. now spend on capital-punishment cases? For half that, have them just ship their death-row inmates to Greece to be kicked into Spartan wells.
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People who can’t pay their bills don’t buy bonds.
You buy bonds with the intention of being paid back someday. Can you see a small problem.
Unfortunate for Greeks, Puerto Ricans, Venezuelans and Illinoisans the laws of economics and math cannot be repealed. Soon to be more on that list
What you really need is something similar but which reaches a much wider pool of potential contributors. Something like…
Someone already owns the bonds. A lot of those people and institutions are foreigners, and a lot are Greeks. I don’t know for sure that having more Greeks owning low quality investments helps the country. Maybe it would help a little.
If they told the old bondholders that you can’t wait until maturity, but must accept payment now, bondholders would be glad, or otherwise, depending on how much they will get. You’re not thinking that they get it all without waiting until maturity, are you? That would be an own goal situation. In reality, where many bondholders would question the payoff amount, it is hard for me to see pushed up maturity as other than a partial default.
This is what I see as the bigger problem with the idea: Sovereign default isn’t always a bad idea. If I was a Greek, I might see it as better than the apparent alternative of an endless full-scale depression, so far going on for five years. So confidence in the government, and expectation of a return to the drachma, could go together.
I don’t have great confidence that the current Greek government would have good public finance policies after a return to the drachma. However, they could surprise myself, and many others, and do a good job.