Lloyds turning the banking tanker

As many regular readers will know I have a fairly bi-polar view of the economy. On the one hand doomsayers predicting the end is nigh are ALWAYS wrong in the same way that those who keep buying gold even right past the high point are going to get burned. However, the idea that some kind of strong recovery from the Financial Crisis is not any more plausible either.

It takes 10 years to recover from such Financial Crashes and we are only 5/6 years in, so plenty of 0% growth success stories will run.

Having said that it is quite encouraging to see Lloyds Bank return to profit today, even better is the underlying reasons; primarily they are managing to wind down their bad debt book at a good pace which means they can find buyers at above pure firesale prices. Secondly their core commercial and retail business remains strong and finally their costs cutting is reducing costs much faster than any losses can be piled up.

On the downside of the cost cutting is lots and lots of lost jobs, tens of thousands; generally though you could hear a pin drop in sympathy with the loss of lots of Banking jobs. Lloyds was never a big casino bank though and was pretty spread out across the Country to these losses are a shame, if necessary. I note too far less outsourcing by this bank (and RBS) to India and the Far East now that they are state owned.

Given Barclays and now Lloyds are in much better shape it only really leaves RBS holding us up.

Recover in the banking sector is a key step, of course the recovery has come due to the fact they won't lend any more on anything like reasonable terms, but you can't build Rome in a day