19 June 2012

EUROZONE : Creating Banking Union...Like Herding Cats; Breaking 'Doom Loop' Will Takes Years.

       OPINION/Hugo Dixon

       '...Parts of the zone’s banking industry are so rotten that taxpayers elsewhere can’t reasonably be asked to bear the burden of bailing them out. A massive cleanup is required first.'
      AND : 'Governments and lenders are currently roped together in what has been dubbed the sovereign-bank 'doom loop.'
      Weak banks – for example those in Spain, Ireland and Cyprus – can drag down their governments when they need a bailout. Equally, weak governments, such as Greece’s, can drag down their banks when those are stuffed with their own sovereigns’ bonds. By shifting responsibility for bailouts to the euro zone as a whole, the loop could be cut.
       The snag is that banks and their governments are entangled in a tight incestuous relationship.'
       And...it will take years...not months...to untangle the mess...because getting the 17 nations of the eurozone to agree on anything...will be like herding cats.