Re:Germany boosts renewables with “biggest energy policy ref...
by lazide on Thursday April 07, 2022 @03:30PM
(#30949284)
Well, there are fixed principal payments - it depends on the term on the loan, and is weighted in various ways when it gets paid, but generally it’s set when the contract gets written. Otherwise, how would the lender know how long the cash would be out of their hands?
Interest rates are supposed to cover the lender by compensating them more than they lose by writing the loan (due to things like the time value of the money, inflation losses, etc).
If no one pays interest worth writing the loan for (aka they get more money than they think they would lose at the end) then who is going to write it?
Maybe the gov’t as a policy thing? But ugh. Talk about a recipe for bad loans.
And if Germany writes themselves a bunch of Euro denominated loans for $20 trln worth of electrical equipment and infrastructure that would certainly bottleneck on a few, often foreign manufacturers? Then you’ll see that trade balance get weird quick.
Interest rates are supposed to cover the lender by compensating them more than they lose by writing the loan (due to things like the time value of the money, inflation losses, etc).
If no one pays interest worth writing the loan for (aka they get more money than they think they would lose at the end) then who is going to write it?
Maybe the gov’t as a policy thing? But ugh. Talk about a recipe for bad loans.
And if Germany writes themselves a bunch of Euro denominated loans for $20 trln worth of electrical equipment and infrastructure that would certainly bottleneck on a few, often foreign manufacturers? Then you’ll see that trade balance get weird quick.