Banks are trying to delay their reckoning by pretending that “nonperforming” (obviously not classified as such) loans will suddenly start paying again. There was a time when banks had credit standards. During that mythical time, a business that couldn’t pay its debts wouldn’t get magically refinanced as a way of kicking the can down the road. Early losses were the best losses. This is a rule in financial accounting books, though the word “early” is usually replaced with “first.” There is empirical support for this approach. Now, any realized losses mean death to the bank. Standard practice has shifted to avoid telling the truth for as long as possible. There were accounting similarities between banks and Ponzi schemes before. Now they are indistinguishable. This will mean bigger losses later.
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