Montag, 27. Mai 2013

Becoming Japanese

Wolfgang Münchau identifiziert die ungenügende Sanierung des Bankensektors (und internationalisierung der Bankenaufsicht) als Schlüsselpunkt für das Ausbleiben einer wirtschaftlichen Erholung im Euroraum.

I couldn't agree more ...
"European bank supervisors are national operators by temperament, not international referees. They see their job as colluding with their national banking sectors to protect them against foreign competition. When a crisis occurs, they let the next economic recovery take care of the problem, rather than resolving it by reducing banking capacity. While I do believe that a banking union constitutes an important reform in the long run, it is very naive to think that the newly appointed bank supervisors are going to resolve the European banking sector with a determination they never displayed in their capacity as national supervisors.

This leaves us with a bank resolution strategy – if you want to call it that – that begins with an inadequate bank recapitalisation, on the basis of dubious stress tests and asset quality reviews, and is followed by further piecemeal steps in later years as the shortcomings of the strategy become more evident. All this will be accompanied by regulatory forbearance. We are already seeing this process at work in Spain.

Leaving it to the next recovery to take care of the problem will not work this time because the credit crunch and debt deflation prevent the recovery. Resolution is a precondition for growth. But since policy makers are in denial over the problem of debt deflation and the wider impact of austerity, I do not expect to see any real radicalism. [...]
 
So, overall, we are looking at a mixture of financial and regulatory forbearance, small-scale recapitalisations and deleveraging, a process that will take many years to complete. During this period of financial retrenchment, the private sector will remain weak, while the public sector will be constrained by treaty obligations to run large fiscal surpluses."

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