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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (2502)	6/22/2001 10:33:06 AM
From: Elsewhere	Read Replies (1) of 24758

About misdirection of funds by tax incentives A nice example is what happened in Germany after the reunification. The government provided tax incentives to invest in real estate projects in the former East Germany, GDR. About DM 500 billion of private capital caused a huge real estate bubble. Many buildings still remain empty, no tenants or buyers. Bank balance sheets are imploding, a lot of investors have lost a considerable part or all of their wealth. The German capital Berlin has been pushed close to bankruptcy. These weeks it became obvious that the city-controlled Bankgesellschaft Berlin must increase its loan loss reserve by many billion DM (due to failed real estate projects) and requires a capital infusion by the majority stakeholders. The Berlin senate collapsed as a result, and in last week's senate vote the conservative mayor was toppled with the help of the former GDR communist party PDS which tolerates a "red-green" minority coalition now. So this is what former conservative chancellor Kohl is harvesting with his tax incentives. Without the misdirection the capital might have achieved a much higher return on investment by going to startups, for instance. Berlin appoints newly-out gay mayor dailynews.yahoo.com Berlin City Government Collapses Amid Finance Woes dailynews.yahoo.com Bankgesellschaft Berlin bgb.de

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