Now I will try to explain by example in order to understand the root of the causes leading to the collapse of the economy.
Imagine a country where there is no market, and, naturally, all commercial and non-commercial property is valued only at book value.
That is, what was bumped during the entire existence of the enterprise (for example, take it) into the balance sheet accounts of all property (01, 08, 20, 41, etc.), this is its value on the balance sheet.
The time has come when the money has run out - the budget deficit, the limit of bond loans has already been reached. And it is necessary to look for an investor so that he buys the company, thereby gives money to the state and, as the owner, supports its work further.
That is, an uncle comes (or they bring him by the hand. But usually investors themselves show interest) with a sign "Investor". An aunt comes out to him with a sign "Accountant", opens the balance sheet on the last reporting date and shows the value of net assets (equity).
The investor looks at all this and says: "Because there is no confirmed market value of these assets (there is, in fact, no stock market, and if there is one, then the state itself is the 100% owner of all shares in these companies, which bought everything at the price it set itself) It is necessary to make an independent assessment of all the assets of the enterprise, both tangible and intangible.
And then they hire their own local institute of real estate and valuation, which gives its conclusion, where the market value fully corresponds to the book value.
Why is that? Because if there is a discrepancy, and there will be a decrease, then someone will have to take over this difference in the form of losses from previous years. I think you understand how and to whom this will threaten in this ecosystem. Yes, and immediately hit the banks. Their role in this process is described below.
The investor refuses such "attractive" conditions and leaves.
The problem has not been solved, there is no money, and the company needs to keep working. To cover the budget deficit, again, it is necessary to issue money and transfer it to the government through its bonds to the National Bank. And so the process goes on from year to year.
Now imagine this. The time will come someday when the real value of assets will roll out. Whether through an investor or not, sooner or later the real value of assets will come out anyway. Especially when the need for money becomes catastrophic and it will no longer be possible to maintain this value on paper. And this will indicate that the value of all these commercial facilities (enterprises) will start to snowball. And all their property, in fact, is secured by banks that credit.
That is, it turns out that the assets of banks are also collapsing - that is, the money once given to support enterprises will not be returned in full, and the liabilities - deposits of customers of individuals and legal entities - remain at the same level.
That is, the bank has its debts (that is, their liabilities), for example, by 1 billion, and those who owe it (bank assets) will already become, for example, 0.6 billion.
0.4 billion were underdrawn
And as soon as the value of enterprises falls, if not bankruptcy, then an anti-crisis program will be implemented. But in any case, it will all be related to cost optimization, which means lower wages, reductions, etc.
This means that people's incomes are falling, and they are forced to go to the bank for their savings. Is it enough for everyone, given that banks will no longer be able to ensure full repayment of their obligations?
As a result, the real sector is sagging, and the total incomes of the population are being reset due to the situation described above.
This is one of the main chains that will contribute to the collapse of the economy. Therefore, the harbingers crisis in the economy is always caused by banks, and the impetus for this is the economy itself with accumulated systemic management problems in previous years.
It is always good to live on credit to the population, especially when it is not paying for it at the moment, but is transferred to what I described above.
The main thing is that the economy should always look like candy to people today, regardless of what is really going on there.
This is a classic of inflating the real sector with air. And as a result, they work from year to year with profit, without having money, and forcing banks to pump up their assets with toxicity.
