Kuwait's parliament wants to bailout all its citizens from consumer debts. This is brilliant if only because it forces hypocritical bankers to come out and oppose it on grounds of .... moral hazard!
http://www.ft.com/cms/s/0/b7600162-fac2-11de-a532-00144feab49a.html -------------------------------------snip Kuwait’s government vowed to oppose a move by the parliament to force it to buy all $23.3bn of consumer loans in the country, write off the interest and reschedule the payments. The bill passed by parliament on Wednesday envisages using state deposits in local banks, including those of the Kuwait Investment Authority, the country’s sovereign wealth fund. It could cost the government up to $13bn (€9bn, £8.1bn), Mustafa al-Shamali, the finance minister, told parliament last month. The government has argued that the law would reward Kuwaitis who borrowed excessively and fuel moral hazard. [...] Thanks to soaring oil prices and the US invasion of Iraq in 2003, Kuwait’s economy has surged for much of the past decade and spurred locals to go on a borrowing spree. While the government has run a series of healthy budget surpluses thanks to oil exports, the global recession has hurt many Kuwaitis, who borrowed to invest in wilting real estate and stock markets. This has led to a populist clamour for the government to bail out its indebted citizens, as it did on at least two previous occasions – after the Souk al-Manakh stock market crash in 1982 and following the Iraqi occupation in 1991. “It’s good news for Kuwaiti consumers, who are highly leveraged, and anything that helps them is good from a macro perspective. “But as an economist it’s difficult to be positive on something like this,” said one Kuwait-based economist. -raghu. -- Do unto others BEFORE they do unto you! _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
