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Zombie banks

 A member of the board of the Bundesbank in Germany said recently that the European Central Bank should crack down on a political practice engaged in by many of the member states, that of keeping private banks that are effectively insolvent artificially alive on whatever is their available means of life support. 

The issue has become known in Europe as that of "zombie banks." 

I say "Europe" but sense at once that I am guilty of presentism. The term "zombie bank" got its start in the United States in the late 1980s. Remember the days of the "Savings and Loan" scandal? Ah, they seem innocent now. Or ... not. 

But recently the zombie's are a specter haunting Europe. (Gee, somebody once said that about communism, did he not?) 

If a bank has a negative asset value, then depositors will have reason to fear frozen accounts and even notwithstanding national insurance systems the banks may well empty out. If they are still kept alive despite both insolvency and emptiness ... well, one gets the metaphorical significance of Romero movies.

Ireland and Portugal are notoriously inhabited by such walking dead.  

Oh, and the Bundesbank board member I mentioned at the start? Did you wonder about a name? It's Andreas Dombret. He's the fellow pictured above, in the space for which I was tempted to use a clip-art image of a stereotypical you-know-what. 


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