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This must include reform of tax, lending, banking and trade systems – and a total re-think of the role of the state in the economy.
When the cycle breaks the capital flows get reserved and what once were safe assets suddenly are found to load on common factors, such as national real estate prices, to which balance sheet of the lending banking systems are strongly exposed.
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This would instantly give the lending banks new capital.
It added that its main lending banks supported its decision.
Simply put, when it comes to lending, banks are facilitators.
Any resulting bad debt could hit companies and their lending banks.
That suggests a loss of $20 billion to the lending banks, seemingly manageable.
Executives from many of the lending banks sat on its loan committees.
Expectations of lending banks change, we have a reversal of cheap credit and the boom collapses.
It is also lending banks dollars, to compensate for an unwillingness by U.S. money market funds to lend to European banks.
But with the economy still struggling and new regulations meant to eliminate bad lending, bank loans continue to lag.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com