Only full disclosure of toxic debts will get the West moving again

[keep_it_real]

The crucial inter-bank market will remain frozen until the banks are forced, under threat of prosecution, to reveal the true extent of their sub-prime liabilities. Such "full disclosure" won't be easy – involving the exploration of millions of complex derivative contracts, often across borders – but it simply must be done.

So, as a matter of urgency, the West must copy the hard-headed Swedes – who, in the early 1990s, insisted nationalised banks write down the full extent of their non-performing loans before more public money is spent on recapitalisation. Only then – once the sub-prime losses are fully-exposed – can securities markets clear and the inter-bank market reboot.

So we need Swedish-style full disclosure. Nothing else will break the deadlock and get us out of this fix. Western politicians – and commentators – need to stand up to the powerful money men and administer the necessary medicine.

http://www.telegraph.co.uk/finance/comment/liamhalligan/3982447/Only-full-disclosure-of-toxic-debts-will-get-the-West-moving-again.html

I believe she (or is it a he) is correct in stating the only viable solution to the problem. The best solution I've heard yet. It would be nice if the Obama administration made this happen.

[ixion]

1. agreed... this is about recalibrating our REAL market value

and until we come clean and admit it and start acting responsibly, we can be sure that we have not yet seen the worst.

[jwirr]

2. This also needs to include more than housing debts. There are credit

cards that are way beyond the ability for the borrower to pay back. It is time to take a look at the whole picture.

[notesdev]

3. Absolutely... but...

the extent of these debts is so massive the US public has no idea, it's going to be brutal.

[Festivito]

4. But, that would mean people would see that bankers don't deserve that money.

And the banker class think they do deserve it -- so there.

[regnaD kciN]

5. While I think this is necessary...

...it's missing the bigger picture: until something happens to get jobs increasing and wages moving upward without generating major inflation, it's going to be difficult for at least America and quite possibly the entire "West" to get moving again in any meaningful sense. Fixing the liquidity trap will only provide a relative, short-term amelioration as long as people aren't spending because they don't have the money in their pockets (and can't keep existing on debt), thus causing businesses to suffer, thus bringing about more layoffs and wage stagnation/deflation. It's a vicious circle that is part psychological, but needs to be solved by more than psychological measures.

[tbyg52]

6. *before* more public money is spent on recapitalisation

Wow, you mean ask for disclosure *before* giving them money? Great idea! Let's do that! Oops.....

Hey Mr. Banker, I want a mortgage! What do you mean, you want the house appraised first.....?

Once again, our "fearless" leaders have been stampeded. It's what they do best, it seems.