Several German lawmakers hit a nerve last week with their suggestion that Greece sell some of its assets in order to cut its debts. The German newspaper Bild summarized this line of reasoning quite memorably: “We give you cash, you give us Corfu.”
That zinger has prompted a cottage industry of possibly humorous efforts to tote up what Greece should consider selling. For example, the Christian Science Monitor has a slide show of the top ten items it thinks that Greece could sell, including the Parthenon and the Acropolis.
While no one (?) takes these suggestions seriously, they do raise an important point. Spending reductions and revenue increases are important when governments face budget pressures, but they are not the only option. Governments can also sell off assets.
Which raises a natural question. If push comes to shove, what could the United States sell in order to cut its debts?
The United States isn’t Greece, of course, and I am far from suggesting that we actually need to start selling. On the other hand, there’s plenty of rhetoric (some coming from me) that the United States should set a target for its publicly-held debt. If we do adopt one, we should keep in mind that asset sales may be one way that policymakers may try to reach it.
So what does the United States own?
That’s a hard question to answer completely, but a good place to start is the Financial Report of the United States Government. According to the 2009 report, the U.S. owned $2.7 trillion in assets at the end of 2009, up from only $2.0 trillion a year earlier. Many of these are off-limits (we aren’t going to sell the Capitol or the USS Nimitz), but some raise interesting questions.
For example, we own an impressive portfolio of financial assets:
- $540 billion in direct loans (e.g., student loans) and mortgage-backed securities
- $240 billion in TARP loans and equity investments (some of which have since be repaid)
- $24 billion in a trust that invested in AIG
- $65 billion in preferred stock in Fannie Mae and Freddie Mac
We also have a tidy amount of gold:
- $250+ billion (The official financial statements report the gold as worth $11 billion, but that’s assuming gold is worth $42 per ounce. Gold prices are now about 25 times higher.)
Throw in another hundred billion or so for the value of the spectrum that we currently give away for free (not included in the financial statements), and we have a bit more than $1 trillion in assets that might conceivably be saleable. Of course, whether they would actually yield that trillion is an open question.
What about the ideas of the German lawmakers? Wouldn’t they suggest that we could sell Yosemite or Mount Rushmore as well? How much are they worth?
No one knows. Our nation’s accountants understandably make a point of not placing a dollar value on such “stewardship and heritage assets,” almost all of which should never–and will never–be on the auction block.
There might be a few saleable items lurking in there–the United States came close to selling the Presidio in San Francisco a few years back–but the real money is in the financial assets that the government owns.
Coincidentally, I just submitted the comment below on another blog:
Seems to me that a superior measure of our ability to finance/service the current and projected federal debt held by the public would be a metric that measures current and projected debt held by the public relative to (current & projected) GDP AND (public and private) net worth (and its components, assets and liabilities). After all, one’s credit-worthiness isn’t measured simply by income, nor even by income and one’s other credit outstanding, but also one’s assets and net worth.
Granted, it would be a more complex and perhaps somewhat problematic metric in practice, since private net worth is volatile and more complex, and not only could measurement methodology be subjectively debated, but valuations of many assets themselves are the subjective.
I think I’ve seen (in the mass media, blogs, etc.) the debt expressed relative to national net worth, but it’s rare, and I don’t recall if I’ve seen it expressed as comprehensively as would seem ideal to me.
Sell them our Financial Industry CEO’s, Politicians, Central Bankers, and Keynsians: Two bucks, Four bits for the lot …..
The One Hundred and Fifty-Two Year US Equity Great Second Fractal Cataclysmic Collapse: 5 March 2010: A Fractal Replica of 11 October 2007?
Though the Federal Reserve has grossly distorted the normal activity of supply and demand in the debt markets, buying over ten months 300 billion dollars of US treasuries ex nihilo, the equivalent entire annual quantity normally available for equity speculation and money based structural support, a review of two years of readily available weekly and monthly trading valuation patterns for the US CRB and composite indices of US , European, and Japanese equities, nevertheless, easily demonstrates currently occurring saturation areas along the tops of the money supply based asset valuation trading curves.
Will money entering and exiting at these markets’ saturation areas occur nonlinearly and predictably according the quantum principles of saturation macroeconomics?
For the saturation macroeconomist/scientist who follows the simple mathematical quantum fractal patterns, the next three weeks in March 2010 will be among the most interesting days and weeks of asset valuation/fractal time unit observation. A spectacular 152 year nonlinear event is expected to occur in the third week of the next three week trading period. March 2010 is the 93 month of a 46/92 :: x/2x monthly pattern starting in October 1998 which began a major extension of the 70/140 year first and second fractal series for United States equity equivalents with extensional successive debt-money bubbles in sequentially the PC-internet industry, the real estate-financial industry, and now the central bankng industry.
Expected is the cataclysmic (beyond October 1987) nonlinear asset (equity and commodity ) devolution trading event that will define and validate the science of Saturation Macroeconomics.
The 93 month second fractal is made of a 14/35/28/19 of 21 month ideal x/2.5x/2x/1.5x fractal series. March, April, and May represent the terminal three months of the 19,20, and 21st month ideal fourth fractal.
.
The 28/19 third and fourth fractals of the 14/35/28/19 of 21month series is configured in a 34/84/68 week fractal with the Wilshire apogee at 11873 on 11 February 2010 of the third fractal’s 2x or 68th week progression.
March 2010’s Wilshire has two base fractals of 22-23 weeks and 19 weeks starting in October 2008 and March 2009 respectively. The ideal weekly counts of the second fractals to these two base fractals are 22-23/54 of 57 weeks and 19/35 of 38 weeks respectively.
For aurophiles, an interpolated 11/28/22/14 of 17 week fractal (x/2.5x/2x/1.5x) matches the Wilshire’s weekly end point and the CRB’s similar weekly end point.
A reflexic ideal 20/50/40 day :: x/2.5x/2x fractal allowed the science of saturation macroeconomics to exactly and prospectively predict 11 October 2007 as the Wilshire’s nominal high occurring on day 40 of the third fractal.
5 March 2010 showed minutely gaps much like 11 October 2007. 5 March 2010 represented the 20th day of the third fractal of a 10/25/20 :: 2x/2.5x/2x reflexic fractal series (a 0.5 time length exact fractal proportionality of the 11 October 2007 series). Unlike 11 October 2007 which ended(as predicted) near the low of the day, 5 March ended near the high which suggests that a 10/25/25 day or x/2.5x/2.5x extension is possible.
The 46/93 month or 70/152 year daily fractal decay series could be 15-16//(10/25//20/15 ) days :: y//x/2.5x//2x/1.5x which elegantly contains both the 10/25/20-25 possible extension and the mathematical 10/25/20/15 day classic 4 phase series and all interpoated in a 15-16/34/34 days or y/2-2.5y/2-2.5y decay fractal.
The possible terminal fractal daily pathway:
From 5 March 2010 a 3/7-8/6-7 day decay series for the Wilshire would encapsulate the next 14 trading day period. Two days down would complete the first three day first fractal. A surge for three days might complete a x/2.5x/2.5x :: 10/25/25 day final saturation high with lateral movement in a tight trading range with a low for the second fractal in 5 additional trading days. A final lower high for the third fractal in 3 to 5 days with a massive nonlinear event on the 13th and/or14th day of this 3/7-8/6-7 series.
The US transportation index, which led the US equities into the 2002-2007 valuation expansion, disproportionally benefited from the dynamics of a nonsustainable system whereby American paper (debt) was exchanged for transported and distributed tangible Asian goods. With China’s realization that the US Central Bank(the third money-debt expansion element of the post 1998 140 year second fractal extension)can create money-debt-paper at will backed by no real economic activity and that America’s consumers are debt saturated, the lower low gapped area in the transportation index that occurred between 26 and 29 September 2008 from 2160.08 and 2156.09 will not be filled.
Could we get one or two billion for California?
Old-man-Tex (http://theafiles.com)
I am sure the Italian goverment would consider selling Sicily and the “Norther league” party would happily sell the southern part of Italy …. Up to and including at least ROME !!!
If we sold Mt. Rushmore and Yosemite and regulated thier development they would be maintained better and would be a net revenue generator for the government rather than an expense.
How ’bout potholes? Fedreral, state and local governments can sell our roads’ potholes like these guys http://www.npr.org/templates/story/story.php?storyId=124346509&ft=1&f=1006
Speaking of Lao-Tzu’s Tao Te Ching (from which you quoted that line the other day), considering potholes an asset reminds me of something from Chapter 11 (that chapter number being a funny coincidence) of that book:
We shape clay into a pot,
but it is the emptiness inside
that holds whatever we want.
Sell them our “goodwill” according to current accounting standards, its any number we want to make up. I say lets price it at infinity plus 10$, we’ll divvy it up into shares and sell it round the world, and we can issue more stock whenever we need more money. It would be a fine adjunct to the printing presses of the Federal Reserve. Another revenue stream that needs no underlying assets – a fiat stock. Let me know if you have any other economic conundrums that need solved.
[…] Donald Marron Greece is ready to start selling assets, according to the Wall Street Journal, but Corfu and the Parthenon are not on the auction block (no surprise there). Instead, the government figures that by selling […]
Hi! This is my first time on your blog. Got some good info here. I am trying to track down a rumor I keep hearing about. I have read the Chinese government had a hidden clinic near Stung Treng. They were supposedly testing some hallucinogenic drug like acid that made you think you were having an out of body experience. Anyone have any info about it?
[…] in gold might want to consider, along with the prospect that the debt-strapped U.S. government may sell some of the more than $250 billion worth of gold (estimated) that it […]
Greece and Spain won’t pay back. The only thing Germans can do is:
REPOSES 170 Leopard 2AEX Battle Tanks from Greece, and 190 Leopard 2A6E Battle Tanks from Spain.
U.S.A must REPOSES 170 F-16 Jet Fighters from Greece, … the rest is gone with the wind …forever …
Greece must stop paying lucrative pensions with borrowed money, reform the free health care system, and cut down, 4 times the military budged.
what assets/property does the U.S. government own in foreign countries.? I once read that if we sold the property we owned in Hong Kong that we could pay the national debt.
[…] assets. These numbers aren’t perfect–for example, they dramatically understate the value of the gold the U.S. owns and put no value on the government’s ability to tax–but they illustrate that what […]
As we did from 1942-45 the fed. govt. can print money to purchase goods and services from the private setor and sell on the world market to pay off debt. Our fixed assets must be at least $100 trillion, and liquid another $50 trillion..