A “horror vision” pervades Germany – there is the thread of expropriation of shareholders, for instance those of Hypo Real Estate.
In wikipedia, you can find an excellent article on eminent domain. Karl Marx, too, whom I always mentally associated with expropriation, is amply represented in wikipedia. It is always a good idea to read wikipedia articles on issues like these, before blindly starting to discuss matters.
In wikipedia, you can also find the picture I used in this article and the beautiful signature of Karl Marx.
The actual concept of expropriation in Germany is a complex one. It is advisable not to rush ones own judgement.
I can understand that our federal government wants to prevent the insolvency of big banks, because these institutes are considered “relevant to the system” and therefore it can be assumed that the insolvency of one big bank will cause a collapse on all fronts. Besides, the owners have not been very cooperative when it came to selling their shares at current (low) stock market prices, neither have they been prepared to add necessary capital.
Our “proper idea of what is wrong and right” considers it correct to expropriate something that has become a danger and turned into a liability for the community by causing nothing but costs. This is especially true when the owners take no pains at all to restore order to their financial situation.
However, I want to say something in defence of the “bad share holders” at institutes like Hypo Real Estate. They probably thought investing in this bank was a good idea because they considered this enterprise invulnerable due to its “system relevance”. Was there any more security of investments possible as little as five years ago than a German or Bavarian loan bank? Especially if this loan bank had its main business interests in the allegedly most secure type of investment of the world, namely public bonds.
Maybe this is why they paid more for the investment than they would normally have spent on a “non-system relevant” enterprise. That would mean that the share holders who are now to be expropriated are the ones who look stupid. With this, the belief in “secure investments” would further dwindle among all investors.
But there is probably no such thing as a secure investment.
RMD
P.S.
In my personal opinion “system relevance” is a term that should never have been created. I do not believe that banks are as “system relevant” as politicians dogmatically say (see also my article: Banken, eine systemrelevante Industrie …).
(translated by EG)
Loading ...