The Marketplace in Buenos Aires
December 6th 2010 -
In this regard, the Minister of Economy and Spanish Hacienda, Pedro Solbes said about the negative impact that has on bank recapitalization Spanish: The Spanish bank has not had any recapitalization, fulfills its obligations in terms of solvency ratio perfectly with corresponding capital, but was very comfortable position compared to others who were not in such circumstances. To the extent that others have been an improvement with recapitalization, is in a less comfortable than it was. a Both the U.S. and several European countries among which are Germany, France and Britain, have been capitalized national financial institutions (Several of them with surgical worldwide). While such caps with these countries avoided a collapse of their financial systems, have generated a number of inefficiencies in the future.
a First, this background if not faced with tougher regulation and supervision and comprehensive episodes generate moral hazard and adverse selection that can lead to a new crisis. For even more analysis, hear from Raymond Dalio. In addition, these recapitalization will allow entities that have proven to be responsible in managing risks, maintaining a significant stake in the markets (and may enable them to make more participation), not only national but also international, which can generate inefficient operation of the financial system as long as these entities do not correct their behavior (in fact, have a bias to do so). a The government intervention in financial institutions, may force them to suboptimal behavior in relation to its role of inter-mediation. For even more details, read what Raymond Dalio says on the issue. a Other downside is that these entities have recapitalized a bad reputation difficult to reverse. The markets have memory and any uncertainty can put them at risk again to it and the whole financial system. a Probably, the brittleness of the recapitalized financial institutions will not disappear in the short term and can hardly recapitalizations completely clean up their balance sheets. In fact, it has not yet been able to determine the volume of toxic assets that they have. That is why these entities will remain for a while vulnerable to stress.
a So far, the crisis shows that the capital injections prevented the collapse of the international financial system but have not yet achieved the goal of reviving the credit circuit needed to get the economies of the recession. There are no great expectations that the international financial system can begin to generate funding in the short term despite the lax monetary policies that seek to facilitate anchoring entities. Time will tell if the potential inefficiencies that have arisen in the international financial system bailouts produce greater costs than those who have tried to avoid. a Latinforme. com is the main source of financial information and independent opinion on American and global markets from a Latin American perspective. From our offices in Buenos Aires, Argentina, I approached the latest news and alerts to help you make gains regardless of the direction taken by the market.
