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Subject: »NEWS AROUND THE WORLD
You will have to accept that it is impossible to know all relevant facts, worse, the future itself is largely unpredictable. Hence, any credit rating, which is about future capability of repayment of debts within a limited amount of time, relies on uncertain premisses.
The uncertainty of it does not make it worthless. On the contrary, it derives its worth from it. As long as there is a market out there which is willing to pay for credit rating, someone will oblige the market.
The uncertainty of it does not make it worthless. On the contrary, it derives its worth from it. As long as there is a market out there which is willing to pay for credit rating, someone will oblige the market.
Yes, it most defnately has a "certain" value. It was a figure of speech when I said that you can throw them to the trash.
And I also agree that it's impossible to know all the facts but that goes the same for the companies as well and they stil do make balance sheets often largely based on current assumptions. I mean, GDP information is also largely assumed.
So, I believe that countries should be able to make their balance sheets also. This would also have a certain value same as rating information does. For me a balance sheet with notes would be much more interesting than a rating grade.
And I also agree that it's impossible to know all the facts but that goes the same for the companies as well and they stil do make balance sheets often largely based on current assumptions. I mean, GDP information is also largely assumed.
So, I believe that countries should be able to make their balance sheets also. This would also have a certain value same as rating information does. For me a balance sheet with notes would be much more interesting than a rating grade.
Companies have percentages for if things go wrong or unexpected.
Such balance sheets already exist in most developed countries. :-)
They do? Where can I find them?
I was always able to find loads of comparable data on GDP, foreign exchange, foreign and public debt but I don't remember ever seeing any information on government owned assets. I sincerely doubt that any such comparable information is publicly available in a standardised form.
I mean, GDP evaluation methodology is relatively well standardised and therefore comparable. I am simply saying that now already we also need simmilar common methodology for evaluation of countries' balance sheets.
I was always able to find loads of comparable data on GDP, foreign exchange, foreign and public debt but I don't remember ever seeing any information on government owned assets. I sincerely doubt that any such comparable information is publicly available in a standardised form.
I mean, GDP evaluation methodology is relatively well standardised and therefore comparable. I am simply saying that now already we also need simmilar common methodology for evaluation of countries' balance sheets.
I don't think you can find sheets with owned assets of governments on the internet. At least, I haven't found them either.
There is a wealth of information available. You may have to combine several lists and I guarantee you that most countries will consider some property a state secret, but in general, each government has to have its budget plans approved every so often. Look for those.
I think you don't understand me. I know there is plenty information out there. It is one of my hobbies to search and analyse macroeconomic information. Also, I am a financial expert so I know a lot about financial analyses of the companies.
What you will mostly find for countries are the so called cyclic indicators, i.e. relating to what happened in a certain period, mostly yearly. This is what indicators from companies' yearly profit & loss will also tell you. But if we talk about a country's or a company's accumulated debt which is a balance sheet item, then we need the whole balance sheet to be able to put it in the necessary context. You can repay debt either from your income or by selling your assets.
So, you can show either your income statement or put some assets as colateral when you apply for credit. It should apply the same for the countries but we need more transparency on country's assets to be able to assess their whole credit ability. I mean, if you can't repay your loan, you lose your house.
If Greece can't repay its loans, then it should sell what they have. I mean, Greece has GDP per capita almost at Germany's level so they don't have a general problem of wealth like African countries. No, unlike prudent Germany, Greece likes to spend more than it earns. So, when you do that for too long and eventually can't repay your own debt from your income, then you have to sell family jewels. Otherwise you never learn.
What you will mostly find for countries are the so called cyclic indicators, i.e. relating to what happened in a certain period, mostly yearly. This is what indicators from companies' yearly profit & loss will also tell you. But if we talk about a country's or a company's accumulated debt which is a balance sheet item, then we need the whole balance sheet to be able to put it in the necessary context. You can repay debt either from your income or by selling your assets.
So, you can show either your income statement or put some assets as colateral when you apply for credit. It should apply the same for the countries but we need more transparency on country's assets to be able to assess their whole credit ability. I mean, if you can't repay your loan, you lose your house.
If Greece can't repay its loans, then it should sell what they have. I mean, Greece has GDP per capita almost at Germany's level so they don't have a general problem of wealth like African countries. No, unlike prudent Germany, Greece likes to spend more than it earns. So, when you do that for too long and eventually can't repay your own debt from your income, then you have to sell family jewels. Otherwise you never learn.
And that's what they started to do already as there are several large state owned enterprises (energy provider, harbour companies and so on) that could be sold partly or fully.
R.I.P. Dennis Marshall. He was playing for Aalborg BK which is my home team :-(
Actually, I did understand you. :-) A complete list of assets is not available for any country to the best of my knowledge, but you don't really need it, either. Assets which generate a revenue are generally 'on the list'.
As for selling territory: that would be a recipy for eventual war. That is something which you really shouldn't even so much as think about. Just imagine what your neighbours would do if your town or city were to be sold to the Serbians. Greece is no different. In fact, most of the deficit is generated precisely because war with Turkey or FYR Makedonija is still a very real issue. (I am not a financial expert; I am taught to be a historian, who has an interest in certain kinds of finances.)
As for selling territory: that would be a recipy for eventual war. That is something which you really shouldn't even so much as think about. Just imagine what your neighbours would do if your town or city were to be sold to the Serbians. Greece is no different. In fact, most of the deficit is generated precisely because war with Turkey or FYR Makedonija is still a very real issue. (I am not a financial expert; I am taught to be a historian, who has an interest in certain kinds of finances.)
:D It really shows that this is a discussion between a historian and an accountant.
When I wrote "selling land" I did not mean "redraw borders". I meant selling government owned land to any buyer, being domestic or foreign. This is an already ongoing process in almost any country.
If you look at this from an accounting perspective, in country's (or government's) balance sheet you replace land with cash and in buyer's balance sheet cash with land. This is also an example of a business event which is basically neutral to profit and loss statement but with influence to liquidity and thus debt servicing ability. So, this also shows why we need a country's balance sheet in order to get the full picture of its credit ability.
Any country itself also needs its balance sheet in order to be able to determine whether it's smarter to get more credit or to sell assets in order to finance the budget deficit. I know Croatia has a problem with not knowing about how many property exactly is publicly owned and I bet many countries have simmilar problem. I mean, it doesn't make sense that nowadays we can all access easily financial statements of companies but we can't do that for countries whose financial condition influence our lives even more.
The problem is that we're talking about public property and often, when something belongs to everybody, people tend to treat it as if it's nobody's. Especially when they are elected to take care of it for a mandate of only 4 years or shorter. This is exactly how problems of countries' financial discipline, such as with Greece, appear.
Anyway, whenever I discuss such topics, I always conclude that finance should be introduced as a separate subject in modern education at the same time when history and geography enters curriculum. :)
When I wrote "selling land" I did not mean "redraw borders". I meant selling government owned land to any buyer, being domestic or foreign. This is an already ongoing process in almost any country.
If you look at this from an accounting perspective, in country's (or government's) balance sheet you replace land with cash and in buyer's balance sheet cash with land. This is also an example of a business event which is basically neutral to profit and loss statement but with influence to liquidity and thus debt servicing ability. So, this also shows why we need a country's balance sheet in order to get the full picture of its credit ability.
Any country itself also needs its balance sheet in order to be able to determine whether it's smarter to get more credit or to sell assets in order to finance the budget deficit. I know Croatia has a problem with not knowing about how many property exactly is publicly owned and I bet many countries have simmilar problem. I mean, it doesn't make sense that nowadays we can all access easily financial statements of companies but we can't do that for countries whose financial condition influence our lives even more.
The problem is that we're talking about public property and often, when something belongs to everybody, people tend to treat it as if it's nobody's. Especially when they are elected to take care of it for a mandate of only 4 years or shorter. This is exactly how problems of countries' financial discipline, such as with Greece, appear.
Anyway, whenever I discuss such topics, I always conclude that finance should be introduced as a separate subject in modern education at the same time when history and geography enters curriculum. :)
When I wrote "selling land" I did not mean "redraw borders". I meant selling government owned land to any buyer, being domestic or foreign. This is an already ongoing process in almost any country.
I get it, I did misunderstand you from the beginning. That does indeed make sense. To a limited extent. Selling assets also hurts the future capability of generating income. There is no way Greece will be able to repay its debts in the short term, therefore I'd say that it would make morse sense to help Greece realising a positive balance. Selling cash cows is usually not a structural solution.
Without bothering to quote you further, I need to say but: "I agree". :-)
Well, now I am not sure if you really agree or you just want me to stop with my large posts. ;)
I think the only real cash cow any country can have is its strong and dynamic national economy. Government owned assets are usually not very efficiently used capital and anyway it's not up to the government to put it to use but to rather enable private investors that they do. It's always better to put such assets to use by selling them or at least through some sort of public-private partnership in case such assets have strategic or cultural value as well.
I think the only real cash cow any country can have is its strong and dynamic national economy. Government owned assets are usually not very efficiently used capital and anyway it's not up to the government to put it to use but to rather enable private investors that they do. It's always better to put such assets to use by selling them or at least through some sort of public-private partnership in case such assets have strategic or cultural value as well.
I really do agree. ;-)
However, it's a fairytale that the market can do all things more effective than the government. In the Netherlands we're learning this lesson through harsh experience right now. Enterprises owned by the government, if sufficiently 'free', actually enjoy serious benefits. Also, slightly less efficient operation but full profit beats fully efficient operaton but no profit except for income through taxation. The government has no need to own everything, but key high income assets, such as energy providers for example, are definitely useful to keep. In the case of Greece, one of the major issues is effective taxation. Selling off assets doesn't sit too well with that, I'd say.
However, it's a fairytale that the market can do all things more effective than the government. In the Netherlands we're learning this lesson through harsh experience right now. Enterprises owned by the government, if sufficiently 'free', actually enjoy serious benefits. Also, slightly less efficient operation but full profit beats fully efficient operaton but no profit except for income through taxation. The government has no need to own everything, but key high income assets, such as energy providers for example, are definitely useful to keep. In the case of Greece, one of the major issues is effective taxation. Selling off assets doesn't sit too well with that, I'd say.
I agree with that too. There are horrible examples of railways and water distribution privatisations. Such choices are definately far from straightforward.
Yes, effective taxation is the crucial problem in Greece really. But I don't see why selling public assets to repay public debt would be incompatible with solving tax collection at the same time. Anyway, it is true that it depends on the assets available for sale and they plan to sell some 50 billions euros worth of real-estate which is very questionable whether they will be able to accomplish in the short-run.
That's the most stupid thing to do really. Spend like crazy, get large debt and then sell assets like crazy. If countries would plan their economy and financial statements the same way companies do, I am sure that they would act more rational. Greece would have probably gotten less debt and sold their assets sooner and more gradually.
Yes, effective taxation is the crucial problem in Greece really. But I don't see why selling public assets to repay public debt would be incompatible with solving tax collection at the same time. Anyway, it is true that it depends on the assets available for sale and they plan to sell some 50 billions euros worth of real-estate which is very questionable whether they will be able to accomplish in the short-run.
That's the most stupid thing to do really. Spend like crazy, get large debt and then sell assets like crazy. If countries would plan their economy and financial statements the same way companies do, I am sure that they would act more rational. Greece would have probably gotten less debt and sold their assets sooner and more gradually.