BRIAN KANTOR: Banks are up to the task of financing a flourishing economy
The hope is always that a recovery in metal prices will lead to a stronger rand, less inflation and lower interest rates to stimulate a recovery in GDP and credit growth
The global financial crisis 10 years ago was caused by the collapse in the value of US homes, and so in the value of US mortgage debt, globally circulated, that had funded a long boom in US house prices. By 2012 the average US home had lost 32% of its July 2006 peak value. US mortgages, however sliced and diced, lost much of their value. Much of the capital of highly leveraged banks was wiped out. Average house prices in the US are now slightly ahead of their peak valuations of 2006. The value of the average US bank share declined by 83% between its peak of 2006 and its trough of 2009, but has increased by nearly four times since then. The crisis for US banks is long over thanks to bold, unprecedented interventions by the Federal Reserve, which pumped extraordinary amounts of cash and equity capital, supplied by the treasury, into the banking system. Much of the extra cash supplied to the banks by their central banks through open market purchases of bond and other assets, known as q...
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