Author : Adam Klug
Publisher :
ISBN 13 :
Total Pages : 90 pages
Book Rating : 4.F/5 ( download)
Book Synopsis The German Buybacks, 1932-1939 by : Adam Klug
Download or read book The German Buybacks, 1932-1939 written by Adam Klug and published by . This book was released on 1993 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: The German sovereign-debt buybacks from 1932 to 1939 constitute a powerful historical experiment for assessing the desirability of open-market debt buybacks. At no other time has a single country bought back so much debt in such a short time. In the period from 1932 to 1936, at least 35 percent of Germany?s outstanding debt to the United States was repurchased on the secondary market, and 32 percent of its total debt was similarly liquidated. Buybacks continued into the early years of the war. During the most intense buyback period, from 1932 to 1934, the debt?s market value appears to have remained unchanged despite the large reductions in its face value caused by the buybacks. It is impossible, however, to corroborate statistically that increases in the market value of unpurchased debt were caused by the repurchases. Estimation of the so-called Debt Laffer Curve for Germany shows that Germany suffered no loss from the buybacks, because the marginal and average values of the debt were equal. The evidence thus contradicts the view that a country cannot gain from a buyback because such a repurchase will cause an increase in secondary-market prices. Three additional means by which Germany may have gained from the buyback rely on a difference in the valuations placed on German debt by the debtor and the creditors: using buybacks as a concealed export subsidy, keeping them secret, and responding to a threat of trade retaliation, as opposed to a threat of direct asset seizure. Only the last of these is consistent with the available archival and statistical evidence.
