I think the challenge is to still find the right combination of carrot and stick to get the banks back to lending. In Europe the ECB allowed banks previously to borrow quite cheaply from ECB in a hope that this would then in turn be lent out in the market. Instead the money often found its way back into sovereign debt. I think it will just take time for the banks to get back into normal operations, as recoveries from Financial Crashes take longer to be realized. The return of growth to the markets should at least be positive sign to banks to chase better lending opportunities for higher returns, but it may be slower than we like.
Admitted there is been a lot of press about cash sitting on the sidelines with various businesses. When looking at the companies in US they have been slow to invest in more people and equipment and have been reaping the return of cost saving and business efficiencies. In Europe, the earnings have not been as spectacular, which leads to less money to re-invest internally. I think in many cases around the world most of the cash, sits with a smaller number of large companies. They have the opportunity to invest in assets, people and working capital if they can find the right investment opportunity based on their business goals. The small to midsize companies have less of a saving account to tap, so again they need to rely on the banks for their support.
Thanks for your question. The challenges with bank reforms is that it is mid-to-long term fix. It should in theory provide a safer credit system as bank hold more reserves against the bad times and lessen the need for taxpayer to clean them up. To get there however they need to clean-up their balance sheets of non-performing loans and then build their reserves. From a European perspective we did not really have a bad bank clean-up as in the US. One may argue China may have this before them. While the banks are "saving" they are not lending as much and are risk adverse which does not help the smaller more entrepreneurial businesses
How do you mean? May be just a few nations, unemployment still on the high side though. I think the bank reform would accelerate positive improvement in every aspect. Particularly, credit facility to entrepreneurs.
@_HM Don't you think that using funds is a huge risk in the minds of most organizations? Further, how would an organization discern how to use it wisely? It's hard to prove investments... I'm not sure my question would be "Why not?" but rather "why?"
It's really important to plan for hard times when things are going well. Trying to rebuild the engine of the plane as you are heading into a nosedive is much, much harder. I'm glad to see you putting forward a broader idea of sustainability--beyond the green elements. It's important to think broadly on the topic...and i think many leading organizations are moving in that direction.
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