An interesting editorial in Greek newspaper the Kathimirini offers three ways for the country to avoid a debt restructuring.
First, fiscal consolidation should continue but more attention should be paid to the real economy instead of just taking measures to meet the budget deficit reduction target. This means Greece has to mobilize foreign direct and indirect investments.
Second, an upgrade of its credit rating status by Moody’s or S&P at some point in the first half or nine months of 2011 should be pursued with the help of the EU and the IMF. This will help bring down Greek spreads and create a better environment for the country’s bonds.
Third, Greece should try to convince sovereign wealth funds to buy a considerable chunk of its new bonds when they are issued. It is positive that Norway’s sovereign wealth fund stated it is a buyer in Greek bonds because it does not believe the country will default on its debt but this is not enough. Greece had flirted with selling its bonds to the Chinese in the past and should go back to them. The same holds true with Arab or other sovereign wealth funds in the Far East.
Back during the peak days of the crisis there was chatter that Russia may step in and save Greece, though that never amounted to anything. There was also a question of whether the rest of Europe would freak out over this.
And really, except for the first, suggestion, these ideas aren’t that exciting. Yes, Greece will benefit from a reduction in spreads/yields, but in the end, if revenues keep plummeting in line with an economy going down the train, the country will wind up in insolvency either way.
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