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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding
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ggersh
To: ggersh who wrote (5)3/8/2017 11:26:00 AM
From: elmatador1 Recommendation  Read Replies (1) of 13803
 
welcome gg. You are alluding to the Zombie Banks.


Perhaps the best way for a country or a region to combat the growth of zombie banks is to look at the example of the United States. After the global financial crisis, this country imposed rigorous stress tests on its troubled lenders, as well as mandating those that were struggling to raise capital.

Lenders started to recapitalise; they managed to sell off many of their low-quality assets. In doing so, US banks are in much healthier shape than their European counterparts, which continue to be bailed out by governments, accumulate masses of debt and remain deeply averse to lending. Japan has also failed to learn the harsh lessons of its recent economic history, with bank and government bailouts continuing to come thick and fast in order to maintain the dominance of their zombie customers.

As such, harsher capitalisation requirements may need to be implemented if Europe is to escape this sustained period of stagnation, and if China, similarly, is to be prevented from succumbing to the same problems that befell Japan in the 1990s and which continue to plague the country to this day.

internationalbanker.com
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