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Zombie Banks

January 15, 2018 in News Tags:

A few months ago (fall of Lehman Brothers was in September 2008), there is intense debate about whether or not to keep zombie banks alive. Banks often called zombies to those who have huge losses, beyond their own resources in some cases and therefore are insolvent and are technically bankrupt. Because of this situation, do not perform their main function, that would be to give credit, and the successive injections of money in many cases only serve to not finish “die.” Jose Manuel Gonzalez Paramo, European Central Bank Governing Council, told this in an interview published in The Guardian that “no one would think wise artificially keep alive a failed bank.” However a number of actions to across the world contradict this adviser, especially in the United States, which have pumped hundreds of billions of dollars to bail out several large banks. The argument for this is provided by the cataclysm that has followed the Lehman’s fall, as some economists argue that these capital injections are a lesser evil compared to what would be caused if you were not made. As for businesses, is another story. See NY Governor Andrew Cuomo for more details and insights.

Only a few large lobbies, such as the automotive industry have achieved more or less clear support from the governments (in the U.S., France, Germany, Japan …). However, the problem that exists today are not only large corporations, with large structures and large debts. The difficulties and also suffer more, if possible, small and medium enterprises, which have as their financing is reduced, attracting more sales and have many problems when receivable. Thus, today’s fully immersed in the crisis, the administrative activity of many companies are only focused on short-term and focused almost exclusively so in the section on collections and payments, lost countless hours in this type task and the preparation of reports and forecasts financial institutions, managers, suppliers and so on. This means that many companies waste significant resources on work that otherwise they would not lose much time, which could be devoted to other more productive tasks and business development. Further, the financial situation of companies literally hanging by a thread. At this time many SMEs have granted huge amounts of paper, which in many cases is being returned at maturity (generating, in addition to expenses more unproductive work), and on many other occasions is being renewed or renegotiated in the longer term, thus it is postponing the problem, but at one point bursts and sweeps away a company and multitude of suppliers in cascade. Therefore, in terms of productivity and in relation to the financial situation, many SMEs are in zombie state.


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