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January 19, 2013


Frances Coppola

Chris, this fear-trust dynamic is at the heart of the current drive for safety, which both pushes up borrowing costs for enterprises perceived as risky (or makes it impossible for them to borrow at all) and pushes down borrowing costs for enterprises perceived as safe. SMEs are perceived as risky, so fearful banks don't want to lend to them - but they will lend to established businesses that are awash with cash and therefore don't really need the money. When the same happens with government debt, we have the Eurozone. The fears are rational, but the economic effect is disastrous.


Bless you for citing Corrie, lol!

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