However the real problem is that the whole world has got in on the act and we now have a massive global inventory of pricey assets ultimately looking for new owner. There will never be enough such owners to go around and the real truth is that the assets are seriously overpriced.
To overcome that problem you have to run a forbearance system that allows current owners to ultimately settle. Please observe that resetting the price downward actually solves nothing except to sharply increase the amount of abandoned debt for that asset class. It is far better to retain the pricing structure if that is possible.
Governments have been stumbling around this problem since 2008 and have not done well. That is why all USA real estate is deeply under priced and only now recovering somewhat. Foreclosure merely smashed the price structure down so low that every mortgage was essentially underwater. It need never have happened and it only deepened bank losses.
FEB. 3, 2016
In theory, it makes sense for banks to swiftly recognize the losses embedded in bad loans — and then make up for those losses by raising fresh capital. The cleaned-up banks are more likely to start lending again — and thus play their part in fueling the recovery.