Several weeks ago, when Mr Gaspar was one of a handful of people who already knew he was close to be the ex-minister of finance for Portugal, he launched two ideas, a bad one and a good one, none of which got too much attention, somewheat to my surprise. Both ideas, not too favourable to the national banking industry, risk being sidetracked or lost in the present political shuffling or just maybe Mr Gaspar stole the political stage of anxious succeeding governors who will come to re-introduce the proposals as if they were their own.
1. a national development bank sponsered by KFW
On 22 May, what we now know will have been a cordial personal goodbye visit as minister of finance, Mr Gaspar joined Mr Schäuble in Berlin for a one-on-one, where both conferred to the press that in order to combat rising youth unemployment, Germany will make available financial and technical resources to Portuguese entrepreneurs via the KFW, the 1948 Marshall plan founded German development bank, used also in the unification of West and East Germany and 100% owned by the German national and bundeslanden governments, currently presided by the same Mr Schäuble.
This means that any potential young and bright Portuguese business plan will have direct access to two essential componentes traditionally unattainable with any Portuguese bank; (1) financing of at least less about 4 - 5 % and - not less important (2) a vast know how of (global) markets and industries that may turn a good entrepreneurial idea into something concretely viable.
For any individual young and new endeavour - whether born out of present misfortune or potential market needs - this is great news. For a nation as a whole, looking forward to the next 25 years, the idea that any feasible and marketable idea will be contracted and supported at a foreign state institute, possibly with an option to convert part of any loan into a (minor) equity participation, I would find outright scary.
In Spain a very similar plan for the same motives has already been put into motion and Italy is also candidate. I guess the only reason why Greece is outright excluded by KFW is probably because there people can recognise a Trojan horse from miles away. Bad idea.
2. government bond buying by the general population
On 21 June, out of his last ECOFIN meeting, Mr Gaspar transpired - in public - his thoughts on how it would be of interest for any common (Portuguese) citizen to become able to directly purchase Portuguese treasury bonds.
Not entirely a new idea in the financing of crises struck sovereignty, but excellent timing all the same.
Very much contrary to trends in other Euro shaken countries, Portuguese citizens continue accumulating savings at local banks, without really knowing where to invest yet concerned on the Euro-wide debate on the security of cash deposits in struggling banks. Equally particular to Portuguese society is that people will be quick to massively adhere to a type of nationalistic salvage operation and put their money where their mouths are, against rating agencies and overall international sceptism on Portuguese sovereign feasibility.
Evidently, patriotism these days has a price and a fairly attractive rate of return of around 6 % which treasury bonds do promise, would be essential. Good idea.
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