Tuesday, 29 June 2010
Life after Debt? Part1.
What is of more concern is that:
a) it is quite surreal for RBS to be pushing this when UK banks are acting in pure schadenfreude mode because they have already gone bust.
b) Having said that, European banks do have a lot of debt that they can't shift. This means no new lending and reduced profitability/increasing losses.
Europe is turning Japanese. The real story in Japan is that quantitative easing has not fixed their economy, it has not generated the inflation needed to wipe out wealth and debt. All Japan has had is 20 years of recession. There has been no life after debt.
Europe is heading the same way. For there to be life after debt we need catharsis, that means banks going under, crazy loans being defaulted upon and not put into 'extend and pretend.' That way is the the Japanese experience.
At least in the UK we have a Government determined to create a life after debt, more austere perhaps, but a life at least.