Toxic debt and bad banks

02 March 2009
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Toxic debt is a name given to international assets held by banks that they are unable to sell or have diminished in value to a fraction of their original value.They might for example be bundles of security held on non performing US residential mortgages.

Our lenders have made mistakes and misjudged the property bubble.However the exposure to physical investment properties and development land is in our view a long way away from some of the toxic assets held by many international banks.

The idea of a bad bank is also one that raised some concerns for us.There is merit in setting up state controlled development bank for a limited period of time that might bring together the non performing developing land assets and tie in their development with our national development plan.Beyond this we do not see the merit of throwing in all non performing loans into a big pot.

Our single biggest concern is our budget defecit.If we dont get this under control and quickly we really are in extremely dangerous country.