Today, the German Bundestag will clear the way for the financial aid for Greece. What should be done with the money?
I will suggest an open market purchase of Greek government bonds. If Greece will use the money to buy their own bonds at distressed levels of 60-70%, this leads to an immediate reduction of the debt. A repurchase of a 1bln Euro debt will cost only 600-700 million! Every company or private debtor would do this, if he has the money, is not insolvent and has market priced debt.
A side effect of this would be, that immediately after announcing this repurchase program, the bid side will disappear and a short squeeze will be triggered. If "evil" speculators are the reason for the debt crisis, they will pay for that. Sounds easy, is easy ... but won't be done.
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