Things don't look good for the world's biggest banks according the International Monetary Fund (IMF). An editorial in the Financial Times is reporting that the IMF sees a mess around the corner, and it's tied to failed assets and a lack of capital. This is an interesting turn of events, especially when the U.S. government has essentially underwrote the financial mess in the U.S., with U.S. financial leaders suggesting that the worst is behind us.
The primary issue for banks according the IMF is that they're burdened by short-term debt obligations. Paying these debts down will cost money. In addition, the securities market - which helped generate and transfer capital - has dried up because of regulatory concerns. In a few words, things will get worse before they get better. The anticipated shortfall for European and U.S. banks is between $650b and $875b.
For this reason the IMF wants the world's banks to stop waiting for a much anticipated "recovery" to take care of their problems, to take their lumps, and to start booking their failed assets at real prices.
Interesting. It's almost as if the IMF wants the banks to take responsibility for their poor decision-making. What a concept.
Stay tuned.
- Mark
The primary issue for banks according the IMF is that they're burdened by short-term debt obligations. Paying these debts down will cost money. In addition, the securities market - which helped generate and transfer capital - has dried up because of regulatory concerns. In a few words, things will get worse before they get better. The anticipated shortfall for European and U.S. banks is between $650b and $875b.
For this reason the IMF wants the world's banks to stop waiting for a much anticipated "recovery" to take care of their problems, to take their lumps, and to start booking their failed assets at real prices.
Interesting. It's almost as if the IMF wants the banks to take responsibility for their poor decision-making. What a concept.
Stay tuned.
- Mark
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