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PPIP: Public-private partnership is to partnership as date rape is to dating

Baseline Scenario:

Dennis Snower works out the arithmetic behind the Public-Private Investment Program and shows something that we’ve suspected: if the assets are really toxic (the gap between book value and long-term expected value is big), the subsidy just isn’t big enough. He also shows that if the assets are only a little toxic, the government subsidy induces private sector bidders to overbid, making the subsidy bigger than it needs to be.

I'm shocked.

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