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Shadow government banking

Governments have, just like banks, quite some ‘off balance sheet’ debt, which is considered not to to be part of the ‘official’ debt of the government as it is not primarily owed by the government but by a government controlled ‘entity’. The government is, however, often responsible when things go wrong. Especially Germany has a lot of this kind of debt. Greece has remarkably few of such contingent debts. What kind of organizations make up these ‘entities’?  A full 121%-point of the 126% of GDP contingent debt of Germany is caused by ‘units involved in financial activities’ (Sparkassen and the like, 40% of all banking assets in Germany are owned by public banks). Mind that these banks have assets too, of course. But ‘contingent government liabilities’ for banks not controlled by the government, the kind of liabilities which cause Brussels to wreck the European welfare states (cut pensions to save the bankers), are not included in these data. Fun fact: the third bailout memorandum for Greece states in a rather shrill, almost hysterical way that CEO’s of banks have to be independent of the government. The German Sparkassen of course aren’t.  Germany was one of the very few countries which did not have a house ownership and price bubble.

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