Academic studies confirm a recurring sequence from surging private debt levels to banking crises,and from banking crises to sovereign debt defaults. This development tends to be exponential, and is often followed by a period of credit contraction, or deleveraging. In the recent past, periods of serial defaults have become much shorter, more frequent, and sometimes more severe.
No country is immune, as the contagion of credit bubbles followed by credit crashes moves freely between countries given the lack of capital controls, in-bound as well as out-bound.It is essential to make these tsu-moneys more easily detectable. Credit bubbles usually start unnoticed and unmentioned with overleveraging of creditor banks as they recycle export surpluses to net importers, as their central bank supervisors look-on with indifference.
Then the same monetary authorities who allowed the excessive wholesale cross-border lending want to penealize the local depositors, the mom-and-pop cafés and restaurants, for having placed their deposits with banks which got too much cross-border funding.
A clear case of two wrongs making a disaster.
It would help if decision makers overcome their deficit of analysis, using the correct indicators for bank leverage, and didn't ignore the off-balance sheet items:
Debt leverage: total liabilities /capital and reserves
Capitalization or solvency: capital and reserves /total liabilities
Asset leverage: total assets /capital and reserves
See also Tsu-money Alert http://ppplusofonia.blogspot.pt/2013/03/tsu-money-alert.html
and EBF on Bank Leverage http://www.ebf-fbe.eu/uploads/bank%20leverage.pdf
O Público cita o FT Alphaville : "Dijsselbloem, lembre-se que conversas descuidadas custam vidas... e é o momento de lhe custar a si o seu posto" foi o título escolhido no fim de Março pelo editor do blogue Alphaville do Financial Times...
ResponderEliminarO descuido de linguagem que serviu para clarificar quem de facto pode e deve pagar a crise.
The Greek bailout s was “holding operation” to allowing the existing creditors to lay-off their exposure on the ECB, and no firewall was buildt to protect other vulnerable Euozone members.
ResponderEliminarIt's "regulatory capture" on a planetary scale. the regulators of the financial systems captured by the cross-border creditors and doing very little to protect the debtors, and even less to protect the local depositors and savers.