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this is precisely the mechanism that brought about the 2009 crash.

That's false. What is true is that governments have used PPP (public private partnerships) as a way to avoid public debt (they pay "rent" on infrastructure which is privately-owned for a number of years after it's built) and this tends to be more expensive in the long term than the State building it itself and paying for it. Depending on how well the tender is defined, it can be an effective tool, and a real way to pass on some risks to the private sector.

So PPP is a different way to build infrastructure, with more private sector involvement, and it can result in some unnecessary transfers of money  from public to private hands over time, but it's not crazy and it does not create systemic risk.

Even if not done in the most effective way, it is lending to real infrastructure projects. Whether these are necessary or not is not really linked to how they are financed (private contractors would lobby for them anyway if government were to pay for them), and that financing certainly did not create the financial crisis.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 14th, 2012 at 08:43:26 AM EST
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