The Great Debate UK

from The Great Debate:

Germany risks zombie banks

Margaret Doyle-- Margaret Doyle is a Reuters columnist. The opinions expressed are her own --

Germany's politicians seem to have rescued their bad bank. Pushing back the valuation date for toxic assets to before the Lehman collapse has made it more likely that banks will consign their dud investments to the voluntary scheme.

It had looked as if the banks might simply boycott it. However, while the government has scored a political goal, it is no closer to its aim of boosting lending to a credit-starved German economy.
The essence of the scheme is that banks will be able to transfer some 250 billion euros of toxic assets into "eine Bad Bank". In exchange they receive government-backed paper that they can count towards regulatory capital.

In principle this will raise their lending capacity. However, because the Germans do not want to reward reckless banks, the banks will pay an annual fee to participate, and will be liable for any shortfall at the end of the scheme. In other words, there is no fundamental risk transfer from the banks and the uncertainty about their eventual liability remains.

The breakthrough this week is that the government has pushed the valuation back to before the collapse of Lehman last autumn -- when valuations were much higher.

from The Great Debate:

Europe frets over crisis exit strategy

Paul Taylor
-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

Higher taxes? Lower public spending? Devaluation? Inflation? Investment in green growth?

European governments are pointing in very different directions as they debate an exit strategy from the global financial crisis. Despite European Union efforts to coordinate economic policy, there are clear signs that the main European economies will charge off in disarray towards separate exits.

Rolls-Royce on a roll despite downturn?

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David BaileyProfessor David Bailey works at the Coventry University Business School and has written extensively on globalisation, economic restructuring and industrial policy, with particular reference to the auto industry. The opinions expressed are his own. -

Recent comments by Tom Purves, Chief Executive of the British based but German-owned luxury car firm Rolls-Royce, struck me as interesting on a number of levels this week.

D-Day’s lasting legacy

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nick-hewitt_000006_1- Nick Hewitt is a historian in the Department of Research and Information at the Imperial War Museum in London. He studied history at Lancaster University and War Studies at King’s College, University of London, where he specialised in naval history. He joined the Imperial War Museum in 1995. The opinions expresed are his own.-

“D-Day at last! Invasion! Hurrah! God save the King!” wrote a Cheshire schoolgirl on the evening of 6 June 1944. For her, news of the successful D-Day landings clearly meant a great deal. But looking back after sixty-five years, what was the historical significance of D-Day?

Berlin must refuse Arcandor credit note

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alexander-smith– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

Arcandor’s chief Executive Karl-Gerhard Eick has warned that if his department store group is forced into insolvency, it will do to the retail sector what the collapse of Lehman Brothers did to finance. It is hard to know whether Eick really believes this, although one has to hope he does not.

Don’t scapegoat the Germans for crisis

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paul-taylor– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

A revisionist theory on the causes of the global financial crisis blames surplus countries like China, Japan and Germany as much as highly-leveraged, deregulated finance in the United States and Britain.

Germany’s political and economic phoney war

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paul-taylor– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

Germany is becalmed by a political and economic phoney war five months before this year’s most important European general election. But a lack of real economic debate now risks prolonging the political stalemate and delaying much needed reforms.

Germany’s bad bank fudge

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REUTERSpaul-taylor– Margaret Doyle and Paul Taylor are Reuters columnists. The opinions expressed are their own –

LONDON/PARIS, April 23 (Reuters) – Germany is to set up a system of bad banks before the summer recess to hold some 250 billion euros of toxic assets. Finance Minister Peer Steinbruek has assured taxpayers that his solution — called “eine Bad Bank” (there is no German word for the concept) — will not weigh on the budget.

from The Great Debate:

U.S. fights fire, Germans fear flood

Paul Taylor Great Debate-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

The United States is fighting a fire in the world economy, but Germany and some other European countries fear a flood of inflation as a result.

That clash of cultures is at the heart of transatlantic debate over whether Europe should spend more and ease monetary policy to revive growth, with a deep economic contraction certain this year and an end to the recession not yet in sight.

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