Sorry, Germany. Greece won't sell Corfu. Wanna buy Yosemite?
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 salable. 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 salable 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.
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