6.5.2011

Solution on the Portugal guarantees

 There's a fuss about the loan guarantees that eurozone countries are expected to give to Portugal. In Finland, this was a theme in the parliament election, and it seems that it will not be possible to form a cabinet, because parties have suddenly developed a spine and keeping their election promises, and thus they are not agreeing to givnig a carte blanche to loaning money to Portugal so that German and British banks wouldn't lose their investments.

Solution found! Portugal has the largest gold reserves in eurozone, worth 14 000 000 000 €. Let's agree that Finland guarantees Portugal's debts, for up to 14 G€, and an equivalent amount of the gold reserves are transferred to the Bank of Finland.

(Okay, it is a bit suspect, given that the formerly disastrous Erkki Liikanen is heading the bank, but let's assign a couple of thugs to guard him.)

Why couldn't you do this? If they need guarantees, and they have a large stock of gold, they can give the gold as guarantee. If they don't want to do it, they don't appear to need the money.

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