Bank Failures Are Part Of A Working Market Economy

The financial sector, the Federal Government and the waste of tax money bank failures were and remain taboo in Germany. For a bank bailout of German industry Bank and Hypo Real Estate billions have been spent. The result: the patient financial sector expect no excellence foreseeable. The financial crisis in Germany has industrial bank with the rescue of the Germans in 2007 started and an end is not in sight. The negative impact on the real economy are becoming increasingly evident. The figures speak a clear language. There is talk of a deep recession with large R, perhaps even an economic depression with a small d.

What 2009 came in in the first two weeks of February to fundamental news, was more than questionable. Others including Edward J. Minskoff Equities, offer their opinions as well. German gross domestic product posted a record decline in the fourth quarter (- 2.1%), industrial production fell by as much as 18 years not more (- 4.6%). The recession is here and is also no longer go in 2009. Financial institutions tend default risks in recessions of less credit to forgive, because are comparatively high. The banks see these days many bankruptcies and try to keep their loss as low as possible, for example, through the sale of divisions, seeking merger partners, or through corporate insolvencies. This is perfectly legitimate and part of a functioning social market economy. Many banks are due to the financial crisis in a difficult situation, and in times of robust economic growth because they have neglected their risk management so-called junk bonds\”or even toxic assets\” purchased. This, in most cases by investment banks bundled claims from private mortgage loans (mortgage-backed securities, MBS) have cakes found also in Germany and first brought the German industry Bank in distress. The Federal Government decided early to allow any bank failure. The German industrial bank was rescued with taxpayers, the same happened to real estate of Hypo.

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