After an extended weekend, yours truly is back amongst the midst of writing the blog. The denizens of the country bore the brunt of a political fiasco culminating in a nation-wide protest which saw the nation coming to a stand-still. The economical development has taken the back seat in the race towards removing the country from the list of Least Developed Countries as the inevitable political pressures on the government surmounts. I have always wondered the impact of the strikes on the economical aspects of our country as such strikes will hamper the production and growth (whatever little of it). But, one’s opinion it seems is meaningless in an otherwise lobbying world. ‘Development’ is a word only used in meaningless seminars and conferences to inculcate a feel-good factor for the organizers and participants alike. The real picture is in front of our eyes and it’s not looking bright at all. Unless something is done to overcome this brewing situation, Nepal will continue to tread along dangerous lines.

Another sector which is treading along dangerous lines, are the European banks which are witnessing immense pressures from rating agencies and investors alike to enhance their capital or face the brunt of a bail-out fund. The European Banking Authority (EBA), in releasing the results of its updated stress tests recommended European banks to raise 115 billion Euros in extra capital, mainly to offset a fall in the value of their existing holdings of government bonds issued by troubled peripheral European countries.

The banks with the biggest capital shortfalls are those from Spain, Greece and Italy. Several may have to tap government bail-out funds to raise the capital, creating the circular prospect of governments bailing out their banks that are in turn supposed to bail out the government. Banks in Germany need additional capital and Commerzbank, Germany’s second-largest bank, may also find itself asking for government help to fill a 5.3 billion Euros hole in the balance sheet. Banks from richer countries will be even less inclined to help out. Governments hoping for a helping hand in bond markets will have to look farther down their field than their own stumbling banks.  

Europe has been in the news for all the wrong reasons. Once known as a transit point between the east and west, the European nations are now facing the fight for their lives as policymakers look for ways to encounter the worsening situation. Its better late than never, but more waiting on this aspect will certainly spell doom on the region. It’s now or never!