Recently I wrote a post on the website, Eyes on Obama, (go to blogroll and click on site, it is an excellent site) where I said that there was the possibility that the US could have a Japanese style “lost decade” with the way we are handling our banks and the problems they are having. And I am not alone, which makes me feel pretty good in an egotistical sort of way.
The U.S. economy is in for a “lasting slowdown” and could face a Japan-style period of relatively low growth coupled with high inflation, billionaire investor George Soros said on Monday.
Soros, speaking to Reuters Financial Television, also warned that rescuing U.S. banks could turn them into “zombies” that draw the lifeblood of the economy, prolonging the economic slowdown.
The healing of the banking system and housing markets is crucial to recovery. “The banking system, as a whole, is basically insolvent,” Soros said.
What’s more, the Treasury’s Public-Private Investment Fund is going to work but it won’t be enough to recapitalize the banks in a way that they are able to or willing to provide credit.
“What we have created now is a situation where the banks who will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy,” he said. “Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive. This is the zombie bank situation.”
I think that things are not going to improve given the way that the bailouts are being handled. There does not seem to be any push towards forcing this banks to reform their practices, there does not seem to be any push to find out what went wrong, and the parallels to the “lost decade” are eerie.
Morning Terrant…….it is great to see that someone is listening……we have been bitching about this for sometime now and you are right nothing we have done will stop this from happening again…..sad to say.