be cleansed of the Banker Virus of 2008-
Infinity.
Announcement:
Meeting, this Friday, at the YMCA hall, Shoreditch.
Bring your own booze.
Guru: Let's begin
Nigel: Hello, I’M a BANKSTER & my BANK is a ZOMBIE
everybody: WTF , Nigel?
Checkitout: TELEGRAPH
Banks
must be honest about their toxic losses
This
weekend, I'm feeling somewhat vindicated. More significantly, perhaps, for the
first time in quite a while, I'm also rather hopeful.
Ever
since the sub-prime crisis exploded, Western banks have been harbouring huge
hidden liabilities, burying them using
off-balance sheet vehicles, complicit auditors and a host of obfuscation
tactics. Photo: PA
By
Liam Halligan, Economic Agenda
6:00PM
GMT 01 Dec 2012
Vindication
comes in the form of the latest Stability Report from the Bank of England's
Financial Policy Committee, published last Thursday. For a long time, this
column has focused on the multi-billion pound undeclared losses on the balance
sheets of the UK's largest banks as the major reason why our economy remains
moribund and unable to stage a recovery. The FPC has just shown that it not
only agrees with that view but wants to take some action.
Ever since the sub-prime
crisis exploded, Western banks have been harbouring huge hidden liabilities,
burying them using off-balance sheet vehicles, complicit auditors and a host of obfuscation
tactics. Financial markets know this, which is why banks have been trading at
extremely low "price-to-book" valuations – with many priced at less
than the value of their tangible assets.
If
the UK economy is to fire on all cylinders again, our banks badly need to raise
fresh capital, so providing finance to the creditworthy businesses that will
pull us out of the recession danger-zone. Our politicians stick with the
"growth versus austerity" soap opera, trading ideological jibes as
they argue over future taxation and spending plans that are anyway largely
fiction.
The
genuine cause of our economic torpor, meanwhile, is that banks aren't raising
the new private sector capital needed to kick-start investment and commerce.
That, in turn, is because no one trusts their accounts given the huge
smouldering sub-prime related losses which bank executives are pretending don't
exist.
What's
needed is "full disclosure", forcing the banks to recognise such
losses, taking the hit, and moving on. Some banks would fail, of course,
executive egos would be bruised and reputations would suffer.