Posts Tagged 'HRE'

taking the hype out of the hypo

Today’s Economist has a couple of interesting articles on Germany, bailouts, real estate, HRE and cash-for-clunkers car bonus. The most interesting bits in my opinion are:

The plans are hobbled by two constraints. The first is that the government hopes to avoid transferring much of the risk of losses to taxpayers without first punishing shareholders. That conflicts with the government’s equally pressing desire to avoid nationalising any more banks. These contradictory aims preclude the government from, for instance, wiping out the value of equity in banks by forcing them to write down their assets.

and

…fretting about debt and inflation is equally characteristic of the German soul. Many commentators have criticised the scrapping bonus. Singling out one industry for subsidy, even if it accounts for 20% of industrial production, is economically dubious. The bonus may rob sales from other deserving industries, from white goods to beer—as well as from future car sales. In France, which offered a scrapping bonus in the mid-1990s, sales slumped by 20% in the year after its expiration.

…but you can read the full articles herebelow.

Continue reading ‘taking the hype out of the hypo’

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