segunda-feira, agosto 06, 2012

Nobody forced the creditors to lend

Debt workout 101 - part 13
It is frightenning, dangerously polarizing and ultimately counterproductive to read article after hysterical article  about the loss of patience in the Eurozone, etc. etc.
Creditors need to get real, cair na real as the Brazilians. The borrowers can't pay, certainly not at par and not on time, live with it.

The current Eurozone bad loan problem  has its origins in excessive lending by surplus country banks in 2006-2007-2008.  But pity not the creditors, nobody forced them  to lend. 

Creditors who made  bad credit decisions should be prepared to absorb losses when borrowers suspend payments and require a debt restructuring. That's what bank capital is there for, to absorb losses

What was the consitutionaility of making bad loans to borrowers whose credit-worthiness the creditors misjudged?

Are we on the way to a solution, or are we getting mired deeper into the problem?
Mariana Abrantes de Sousa
PPP Lusofonia

ECB diverges fom Bundesbank orthodoxy