Readers of this Blog will want to keep up with LBS’s thinking on how the new banking rules will affect the real economy. See his recent address to an Italian conference here. (Surely the correlation coefficient of +0.95 for Ireland in slide 18 is a mistake?) Overall, it seems, there will be little adverse effect on the real economy in the long run.
He is quoted in today’s Italian papers warning the banks that they must use their profits to bolster their reserves.