Germany is to offer unlimited loans to businesses to help steer them through the coronavirus pandemic, its finance minister says.
Olaf Scholz said there was no "upper limit" to the loans, which would be made available through Germany's state-owned bank KfW.
Mr Scholz said the situation was "very serious" and that the economy - and small businesses in particular - needed to be protected, adding: "We will put all weapons on the table."
KfW has access to a support fund of about half a trillion euros, Reuters reports.
Let's be clear: some of these loans will never be recovered.
Let's also be clear; KfW will need state aid to get over that.
And let's also be clear, that KfW can have that state aid because it is state-owned.
But three important things follow.
First, the German idea of a balanced budget will be shattered by this, and thank goodness for that.
Second, German business will survive coronavirus because of this, when many in the UK will not right now.
And third, then, Germany will c0me out the other side of this crisis in a much better place than we will as a result.
And how will this be paid for? I very strongly suspect European Central Bank quantitative easing will fund this arrangement. I hope it will do the same for other eurozone countries.
Just as such an arrangement in the UK could also be quantitative easing funded if we wanted.
But it seems that we do not want that.
The sooner Rushi Sunak is back at the Dispatch Box the better.
Hat tip: Tim Rideout
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I have just worked out what may be a fitting/clumsy anagram for our (sorry, their) new Chancellor that sums up his inability to do the right thing with the threat of Corvid 19:
I RISK SHUNA
(I, risk shunner)
Yes a more measured response, but not unreasonable.
“A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch in a matter of weeks to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.”
Unlike the UK, German business does have a reputation of feeding off government largess, and low “transparency”. Should a reverse the object and subject here?
The Germans are going to guarantee survival
We might partially help the few who get through the paperwork
There is only one winner….
Are not you not slightly incredulous that infinite financial support comes any time there is a crisis which effects the asset owning class? That perhaps the decimation of their wealth might lead to a fairer society as Piketty describes happening during past crises?
Since the Harz reforms Germany has been as neoliberal as anywhere in Europe and the only aim of the CDU will be to resume normal exploitative employment practices as soon as possible.
The message is poor Greeks can go hang (literally as seen in suicide stats) but rich Germans will always be supported. The single and ever more unequal market…..
Point accepted
But, I would still suggest that the policy is appropriate
See the blog I am about to post from Colin Hines on what we need to do
KISS is one of the most important acronyms in planning. Looking at the budget and other responses to the coronavirus it is clear that HMG is failing to provide simple functional solutions anywhere, and when they do the implementation failure is total. The one simple message that I have received is phone NHS 111 if ill, but stories abound of 3 hour waits. By contrast the German approach to business and the French solution to payment for those isolated (plus the link with the health system) are functional . So where are we? (don’t know) Where do we want to be? (don’t know) How are we going to get there? (don’t know)
Surely in this time of uncertainty, one should keep ones options as open as possible.
Writing blank cheques at this stage looks to me, premature.
There is a possibility that we will be in a new era. The government should avoid wasting resources by subsidising legacy business.
Fully support the rent holiday ( paid for by landlords!) for people under financial stress.
And against supporting airlines and aircraft manufacturers