July 27, 2013

Europe is doomed to a wrong recovery with dangerous obesity

Sir, you write that “Europe risks a ‘wrong’ recovery” July 27. Wrong! Europe is doomed to a ‘wrong’ recovery. Any economy in which its banks are made to keep away from lending to small and medium businesses and in which only because these are perceived as “risky” stands no chance of getting on the track of a right and sturdy recovery.

You admonish Europe to “remember that how an economy expands is just as important as whether or not it grows.” And you are absolutely correct. An economy in which banks lend primarily to the “safe” only because regulators then require the banks to hold less capital and therefore then allow banks to earn higher expected risk-adjusted returns on equity, will only grow obese and fluffy, prone to a final and fatal heart attack 

Europe, pray: “God make us daring