What happens naturally - bankruptcy

The farce is over

At last I have seen the first press commentary about the banking/euro crisis (they are really the same thing). You see, what happened was:

- Countries borrowed too much and spent ridiculously more than they could ever pay back. Sovereign value has a limit, a big one but a limit.

- and on the contrary, banks loaned more than they could expect to get back, ignoring prudence and over leveraging themselves, effectively devaluing the money they are in business to prosper.

Guilt

Both sides are equally guilty of causing this crisis, and both side have to solve it. So far banks are pretending they are blameless, just lending countries what they need provided the return is right. The problem of this is a return of 7% or more cannot be repaid after a certain time when the total outstanding debt is 120% or so of GDP.

On the other side, countries went on a spending, or ridiculous social support, binge. They borrowed to prop up social systems that were poorly thought out and too expensive. They made bad investments in national industries that could never give a return. In other words they paid us all to not have to work.

Bankruptcy

And now the moment has come: why not bankruptcy? OK so both sides lose but that is the correct and natural way of finance, not the 'kicking the can down the roda' sticking plaserts we have seen for months. Let's just get on with it and see if we could possibly manage it smoothly. Get the real value back in our money, get the banks to stop derivative gambling, stop people over-extending themselves with mortgages they can't afford and seems of credit cards in their wallets.