How many times has it happened that we have tried to do an in depth analysis of an issue only to find out later that the solution was not only simple but also right before our eyes all along? Many a times, isn't it? The current situation in Europe can serve as a very good example of this phenomenon at work. Reams and reams of paper have been spent in trying to find out what went wrong and what corrective measures can be taken. But to say that all of these steps have come unstuck would be to state the obvious. The situation is getting worse by the day with still no foolproof action plan being mooted by the member nations.
Amidst all this chaos, an article in the businessinsider.com points out how almost all the policymakers and economic experts seem to be showing hardly any realism at all. It talks about how it would be next to impossible for Germany, the saviour of last resort to come to the rescue of troubled nations as well as financial institutions as the sum involved would be too large. And what about funding from China? Well, with the Chinese banking system showing signs of trouble, even that option looks like a remote possibility.
Thus, life seems to have come full circle as far as the Euro zone is concerned. Restructuring and bankruptcy, the very phenomena which the region wanted to avoid all along looks like the only feasible option worth undertaking. In fact, the path which was being followed by policymakers had a dead end from the very beginning, the only difference being that right now, it is smack in front of their faces. Thus, be it a nation or a company, a period of high leverage beyond a certain threshold will have to be followed by a period of deleveraging. Anything else just doesn't work. It is one of those unwritten rule of nature perhaps. This is also the reason why we insist onbuying companies with bare minimum debt and some strong competitive advantages.
Amidst all this chaos, an article in the businessinsider.com points out how almost all the policymakers and economic experts seem to be showing hardly any realism at all. It talks about how it would be next to impossible for Germany, the saviour of last resort to come to the rescue of troubled nations as well as financial institutions as the sum involved would be too large. And what about funding from China? Well, with the Chinese banking system showing signs of trouble, even that option looks like a remote possibility.
Thus, life seems to have come full circle as far as the Euro zone is concerned. Restructuring and bankruptcy, the very phenomena which the region wanted to avoid all along looks like the only feasible option worth undertaking. In fact, the path which was being followed by policymakers had a dead end from the very beginning, the only difference being that right now, it is smack in front of their faces. Thus, be it a nation or a company, a period of high leverage beyond a certain threshold will have to be followed by a period of deleveraging. Anything else just doesn't work. It is one of those unwritten rule of nature perhaps. This is also the reason why we insist onbuying companies with bare minimum debt and some strong competitive advantages.
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