Bad Banks: transatlantic differences

Bank rescue packages in Europe and in the USA seem to diverge. While the US administration is thinking about the creation of a national bad bank (e.g. here), a similar proposal in Germany was discussed but seems to have been shelved, as FAZ reports: Nationale "Bad Bank" praktisch vom Tisch

"Bad Banks" for Beginners

This is the title of an Op-ed by Simon Johnson and James Kwak which gives a short but instructive introduction to using "Bad Banks" to bail out commercial banks with bad assets. Both pros and cons are discussed. It's a useful read, especially so since Bad Bank-proposals are seriously being discussed in Europe and in the United States.

In a nutshell

Subprime bubble --> Financial crisis --> Credit crunch --> Recession --> Stimulus package --> Buy American!

And what's next?

Update on 30. January: Now it's almost official -- Buy American stimulus ...

Should we fear a trade backlash?

... is what Barry Eichengreen asks in the Guardian. And his answer seems to be: yes, we should. Reasons are the protectionist rhetoric of the US president-elect and the de facto protectionist measures already in place or at least envisaged, such as government guarantees for the financial industry and bail-out packages for the auto industry.

PS: Arvind Subramanian (Peterson Institute) weighs in: From Financial Folly to Trade Troubles?