End the pretense

The UK’s central banker, Mervyn King, finally admits what was always apparent.  One wonders how long it will take Helicopter Ben to do likewise:

Warning that the next generation may have to live with the consequences of
past excesses “for a long time to come”, he said Britain’s banks needed to
drop the “pretence” that their debts will be repaid.

“I am not sure advanced economies in general will find it easy to get out of
their current predicament without creditors acknowledging further likely
losses, a significant writing down of asset values, and recapitalisation of
their financial systems,” he said.

“Only then will it be possible to return to a more normal provision of the
vital banking services so crucial to an economic recovery… Just as in
2008, there is a deep reluctance to admit the extent of the
undercapitalisation of the banking system in parts of the industrialised

He compared the situation to the “pretence that debts could be repaid” in the
1930s and added: “We must not repeat that mistake.”

They’ve already made the critical mistake, which was failing to shut down the UK’s zombie banks and attempting to prop them up with massive amounts of money printing, government-incentivized lending, and stock market pumping.  But further financial raping of the economy for the benefit of the banks isn’t going to restore them or the economy to health.