Monday, October 20, 2008

Five Billion to Towns and Cities?

Five billion euros have been promised to towns and cities to cover speculative losses, as nearly as I can make out from this rather ambiguous article. These funds appear to be not loan guarantees but exceptional credits to enable the recipient towns to meet expenses. If so, the prospect of future tax reductions, once the centerpiece of Sarkozy's economic policy, would seem to be dimming. It would be nice to have more details about how these losses were incurred.

2 comments:

Leo said...

Art,
they are not talking about losses. Not yet at least.
As so often, the situation is misrepresented by the Media. These are not speculative losses, but variable rates loans, which are indexed on foreign currencies (this was mentionned by Bartolone). This could lead to significant increases in repayment annuities.
Morale de l'histoire: even communist politicians were mesmerized by the wizzardry of modern finance.
By the way, the chief lender was Dexia.

Unknown said...

Leo,
Thanks for the clarification.