Monday, October 27, 2008


John Quiggin has this to say about PPP’s in the context of the credit crunch, and the performance of the ratings agencies leading up to the crisis:

“In Australia, despite the fact that no state or national government has ever defaulted*, the agencies regularly threaten the withdrawal of AAA ratings if governments invest in infrastructure assets. One result has been the push to rely on private financing, through Public Private Partnerships (PPPs). It seems likely now that many of the private partners in these deals will fail, and that the government will be left to clean up the mess.”

The little asterics is for Jack Lang in NSW during the depression, although technically this wasn't a default because the Federal government took on the loan obligations that the Lang government refused to pay.

But, the upshot of this analysis is that the time has come for Government's to go Keynesian again.


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