In a Guardian column, RBS boss Stephen Hester says that he took over 'the biggest balance sheet time bomb in history' and that the losses that have been taken are to defuse this time bomb.
Of course this raises the question of how will any outsider ever know if the bomb has been defused?
Because Mr. Hester or the government says so?
Sorry, market participants learned at the start of the financial crisis the importance of independent confirmation of the contents of a black box.
Ultimately, if Mr. Hester thinks he has successfully defused the balance sheet time bomb, he will be willing to provide ultra transparency and disclose on an on-going basis the current asset, liability and off-balance sheet exposure details so that market participants can independently confirm this for themselves.
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