Bond Outlook [by bridport & cie, July 2nd 2008]
The word of the week is “deleveraging”. Banks must reduce lending, pay off as much debt as they can and expand their equity base. That has been obvious for many months; what is new is that the time that will be required to return to healthy balance sheets is now recognised as a matter of years (two or three), not months. Deleveraging also applies to households, forced with much reluctance in the USA (UK and elsewhere), to restructure their debts. |
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