In order to survive, the banks need to get their balance sheets real dirty, with real “risk”, not with excesses of “absolutely safes”

Sir, Wolfgang Münchau in “Do not kid yourself that the eurozone is recovering” September 30 writes that “The single largest constraint on the resumption of eurozone growth is the continued failure to clean up the banks”

That in itself is an indication that after more than five years, the “experts” do not yet understand what has been going on. It is not that banks have been building up excessive risks to what is perceived as “risky” like loans to medium and small businesses, entrepreneurs and start ups, but excessive exposures to what is perceived as “absolutely safe” like sovereigns, housing and the AAAristocracy.

If, as Münchau hopes, Mario Draghi, the president of the European Central Bank, is serious in producing a clean and honest quality [bank] asset quality review next month” that would also including the review of what is NOT on the banks balances. Fat chance! Mario Draghi was for years the chairman of the Financial Stability Board.