UK and Europe languish in a ‘zombie bank’ malaise…( World…There, I Fixed It!)
Britain and Europe are failing to tackle the problem of technically insolvent banks and are trying to buy time with QE, summits, and other can-kicking measures.
By Liam Halligan
09 Jun 2012
British banks are sitting on “£40bn of undeclared losses”. So says Pirc, the UK’s leading shareholder advisory group. What’s more, Pirc argues, the massive backlog of undisclosed bad debts is preventing our banking sector from making vital, growth-boosting loans to creditworthy businesses and households.
It doesn’t surprise me that some of the UK’s leading banks are technically insolvent. What does surprise me is that it’s taken until last week for a respected professional body such as Pirc to state the obvious.
It’s not that I don’t congratulate Pirc for what it has just said. A relatively small organisation, after all, is now openly defying what is probably the UK’s most powerful lobby. Yet Pirc, and others, should still have called the Western world’s banks on their vast, undeclared losses a very long time ago. Some of us have been banging on, for years, about banking black holes blocking an economic resurgence — ever since this ghastly crisis began, in fact, in mid-2007.
The biggest financial problem the West needs to solve isn’t low growth, or unemployment. Economic torpor, and the human tragedy of joblessness, are symptoms, not causes. The issue isn’t, as some would have it, that governments are “cutting spending too far and too fast”. Western governments are barely cutting, if at all.
The most significant financial problem we face, in the UK and Europe, is that our banking systems remain gridlocked, with banks doing everything possible to conceal tens of billions of sterling and euro losses.