AN ITALIAN Finance Ministry presentation in March 2000 trumpeted the “extraordinary liquidity” of Italian bonds, a result of Italy having, “total outstanding debt [greater] than that of France and Germany together”. In those heady first days of the euro, Italy presented its national debt as a virtue.
Recently the IMF made it clear that the current euro area leadership needs to address its ongoing banking problems. The Eurozone's banks are continuing to deleverage, with total loan balances to euro area residents now at the lowest level in 5 years. What makes the situation even more troubling is that many Eurozone banks banks are repeating the Japanese experience of the 90s. They are carrying poor quality and often deteriorating assets on their balance sheets, refusing to take writedowns that will require recapitalization.
By Christoph Rosenberg and Christoph Klingen
Some hangovers take more than a good night's sleep to get over. It's been three years since the global economic crisis put an abrupt end to emerging Europe's credit boom, but neither lenders nor borrowers are in much of a party mood. One key reason: many of the loans so readily dished out before the crisis have now gone sour.
LONDON — Monetary policy that cannot get traction; weak banks that cannot or will not lend; an economy trapped in a twilight world of low growth, haunted by the spectre of deflation.
If this combination sounds familiar, that’s because it is.
The eurozone, still drowning in debt bequeathed by the great financial crisis, increasingly resembles Japan in the 1990s as it struggled with its own balance sheet recession brought on by the bursting of an almighty asset bubble.
Tim Iacono submits: In this New York Times commentary, Paul Krugman leads what will soon be a veritable gaggle of economists in lamenting the coming lost decade, one that could have been avoided if the government and central bank had only borrowed and pri
By Investment U:
By Ryan Fitzwater
According to the International Monetary Fund Managing Director Christine Lagarde, unless nations work together to encourage growth, we risk another “lost decade” for the global economy.
By Brian Rezny: It was Christmas Day, 1989, when the Bank of Japan raised the benchmark interest rate to 4.25%. The move was supposed to prevent an asset bubble and curb inflation. The result: the market crashed, the economy stagnated, and a debt crisis ensued. And in the more than 20 years since then, little has changed. Japan has struggled through over two decades of weak growth and deflation. And the Nikkei index is still down something like 80% from its peak in 1989.
By Edgar Ambartsoumian:Why are analysts so confident that Japan's "Lost Decade" scenario won't happen to us? During 1990s, Japan's economic expansion came to a total halt. The country fell into a long period of stagnation: relatively high unemployment rates with low interest rates and GDP growth.