Spectator: Risky business

"Bank of England data shows that UK bank exposure to the US increased increased by over half a trillion dollars between 2004 and 2007 to 1.2 trillion." Although the losses can be delayed, perhaps inflated away, or temporarily bubbled over, the losses are a so far unknown addition to the UK budget deficit. Whether the gov. takes shares in the banks, or ring-fences through bad/good banks, the losses will still sit on the UK taxpayer. Japan's avoidance of bank repair and subsequent zombie bank induced deflation isn't mentioned, but the reasoning is very clear for both the UK and Japan, essentially the losses are clearly too heavy to face without social upheaval.