Monday, January 24, 2011

Nouriel Roubini : we risk creating zombie banks

In a recent interview with the German news paper Der Spiegel , Dr Nouriel Roubini was asked about what would have been the alternative to stimulus programs and the intervention of the central banks? Dr. Nouriel Roubini said that we should be careful not to go down that road cause we risk creating zombie banks ....:
Roubini " That's true. But we have to be careful not to go down that road for too long. Otherwise we risk creating zombie banks and companies that are kept alive artificially. Also, look what is going on with the banking industry. We started with a too-big-to-fail problem, and part of the policy response to the crisis has been even more financial consolidation. JP Morgan took over Bear Stearns and Bank of America took over Merrill Lynch. What we have now is financial institutions that are even bigger. Those institutions, even more then before, know if they do something dangerous, something reckless, they will be bailed out again."

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