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Tag Archives: Italian banking crisis

Italy Guns For Glass-Steagall-Type Law to Break Up Banks, Cut Bailout Costs for Taxpayers

The banking lobby and the ECB will have a cow. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. On Friday, Italy’s coalition government unveiled new banking regulations that it hopes to pass in the coming months, including a rule that would separate banks’ commercial and investment arms. It would be the Italian equivalent of the Glass-Steagall Act, the 1933 U.S. law that separated commercial banks that took deposits, made loans, and processed transaction, from riskier...

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Italy’s New Government Eats Its Words, Joins Bank Bailout Club

Well, that didn’t take long. And whatever happened to the Eurozone’s new bail-in rule? By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. Italy’s government, in its eighth month in power, has already bailed out a bankrupt bank, mid-sized Banca Carige, with public funds. If approved by European Commission and the ECB, it will be the fourth Italian bank rescue in just over two years. As Italian daily Il Sole 24 Ore points out, Italy’s populist government has adopted...

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Italy’s Debt Crisis Flares Up, Banks Get Hit, as Showdown with the EU Intensifies

Who will blink first? By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. A serious showdown is brewing in the Eurozone as Italy’s anti-establishment coalition government takes on the EU establishment in a struggle that could have major ramifications for Europe’s monetary union. The cause of the discord is the Italian government’s plan to expand Italy’s budget for 2019, in contravention of previous budget agreements with Brussels. The government has set a public deficit...

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Which Banks Are Most Exposed to Italy’s Sovereign Debt? (Other than the Horribly Exposed Italian Banks)

“Doom loop” begins to exact its pound of flesh. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. Risk. Exposure. Contagion. These are three words we’re likely to hear more and more in relation to Europe, as the Eurozone’s debt crisis returns. On Friday, Italy’s 10-year risk premium — the spread between Italian ten-year bond yields and their German counterparts — surged almost 20 basis points to 212 basis points. This was the highest level since May 2017, when a number...

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Despite the Hype, Italy’s Banking Crisis Metastasizes

The government’s giant debt is already “vulnerable to market turbulence.” By Don Quijones, Spain & Mexico, editor at WOLF STREET. For the last five months, Italy’s third largest bank, Monte dei Paschi di Siena, has been locked in talks with the Italian government, the European Commission and the ECB’s regulatory arm, the Single Supervisory Mechanism, over the design of a taxpayer-funded rescue. The negotiations have no led to a preliminary rescue deal, prompting speculation that...

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The Italian Banking Crisis: No Free Lunch – Or Is There?

It has been called “a bigger risk than Brexit”– the Italian banking crisis that could take down the eurozone. Handwringing officials say “there is no free lunch” and “no magic bullet.” But UK Prof. Richard Werner says the magic bullet is just being ignored. On December 4, 2016, Italian voters rejected a referendum to amend their constitution to give the government more power,...

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So Who Gets to Pay for Italy’s Banking Crisis?

The answers are beginning to take shape. By Don Quijones, Spain & Mexico, editor at WOLF STREET. “There is not and there will not be a banking crisis in Italy, nor will there be a European financial crisis coming from Italy.” Those were the emphatic words of EU Economics Commissioner Pierre Moscovici over the weekend. “We have the capacity to deal with the situation and it will be dealt with from both Italy and at the European level” he told France Info radio. Clearly, quixotic...

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Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers

Teetering Eurozone banks exposed to flying shrapnel. A constitutional-reform referendum on tweaking the way a country governs itself, of the type Italy held today, would normally not be a big deal for banks in that country, and particularly not for banks in other countries, and it wouldn’t have much impact on currencies and credit markets. But these are not normal times for Italy, which is in the middle of a vicious banking crisis, and they’re not normal times for the EU either, which...

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The Fix Is Already In, as Italy’s Moment of Truth Beckons

Banks cannot be allowed, at any cost, to suffer the consequences of their own mismanagement, or worse. By Don Quijones, Spain & Mexico, editor at WOLF STREET. Italy holds a constitutional referendum on Sunday. Europe is sick and tired of national referendums, in the opinion of Jean Claude Juncker, the president of the European Commission. Over the past week, Juncker has urged EU leaders not to hold more referendums as he fears that other European electorates may take a leaf out of...

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Italy’s Banking Crisis Gets Addressed: How to Conceal a Problem that Threatens to Engulf the Entire Eurozone

The Art of Making Bad Debt Disappear. By Don Quijones, Spain & Mexico, editor at WOLF STREET. Markets can move in mysterious ways. Such was the case in Italy last week when the stock of the country’s third biggest and most beleaguered bank, Monte dei Paschi, surged 59%, from €0.17 a share to a totally whopping €0.27 a share, pairing its losses for this year to just 78%. But why? After all, nothing of real import happened over the last week, apart from an announcement from MPS’s...

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