Izabella Kaminska: Dark inventory, death of a city edition:
As we’ve argued before, the world is beset by a capital crisis not a debt crisis. There is too much capital and not enough productive use for it — at least not in western markets. At least nowhere near enough to guarantee the sort of returns “savers” have become accustomed to over the last few decades. The truth is that nowadays all savings come with risk. Yet most capital investors are simply not prepared to accept that. This is where the problem begins. For a long time, banking intermediaries took the risks on behalf of savers but, as we all know, this didn’t turn out so well for them in the end. Now that banks are being forced to de-risk, however, this poses a different problem for ‘sacred cow’ savers. They are now up in arms over low yields and no lending, demanding — ironically — that banks take more risk regardless of the lessons learned. Which, of course, is something of a double standard coming from savers, since they themselves are not prepared to take the risk either. And yet someone has to take the risk. The burden understandably falls on the government.