Wildfires Force Emergency Measures in Crete and Attica, Arson Suspected in Halkidiki
A state of emergency has been declared in the area surrounding the large wildfire near Ierapetra on the Greek island of Crete
Greece’s four largest banks, which control 88% of total assets in the banking system, could be in for a much bigger shock than initially deduced, a renowned economist has said.
“A deeper analysis of the numbers reveals that Greece’s largest banks include deferred tax assets as part of total equity in their financial statements,” Prof. Steve Hanke, a professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, opines at cato.org.
He explains that deferred tax assets are created when banks are allowed to declare their losses at a later time, thereby reducing tax liabilities.
“This is problematic because these deferred tax assets are really just “phantom assets” in the sense that these credits cannot be used (read: worthless) if the Greek banks continue to operate at a pretax loss,” Hanke argues.
Adjusting the so-called Texas Ratio to account for the phantom assets yields figures that “indicate significantly higher risk of bank failures, barring a capital injection”.
You can read the full article here.
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