As Martin Wolf has recently reminded us, since the world cannot trade with Mars, creditors are joined at the hip to debtors, and any adjustment cannot be one-sided. These developments in the euro area have important lessons for other single currency areas, including moves towards monetary integration in Africa.
On the other hand, the Japanese banks are cautious about extending new loans to firms with low credit ratings and the banks have not increased credit spreads adequately on their lending to existing less creditworthy borrowers.