barryqwalsh
Gold Member
- Sep 30, 2014
- 3,397
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For decades before the crisis, in every developed economy, bank lending grew at two or three times the rate at which the economy grew.
Central bankers and other economists came to believe this was normal and natural; how you achieved a growing economy.
In reality, it just meant that when the mountain of credit finally collapsed, plunging the world into its worst recession since the 1930s, many households and businesses were left deep in debt.
According to Turner, it's this "debt overhang" that's doing most to stop the major economies returning to healthy growth. As part of the initial response to the crisis, governments shifted much of the banks' own debt onto the government's books.
Banks still haven't got the message that bad behaviour is not on
Central bankers and other economists came to believe this was normal and natural; how you achieved a growing economy.
In reality, it just meant that when the mountain of credit finally collapsed, plunging the world into its worst recession since the 1930s, many households and businesses were left deep in debt.
According to Turner, it's this "debt overhang" that's doing most to stop the major economies returning to healthy growth. As part of the initial response to the crisis, governments shifted much of the banks' own debt onto the government's books.
Banks still haven't got the message that bad behaviour is not on
