Italy’s Banking Crisis Spirals Elegantly out of Control

[marmar]

Italy’s Banking Crisis Spirals Elegantly out of Control
by Wolf Richter • February 14, 2016


How to dump toxic waste on the public through the backdoor.

Back during the euro debt crisis, while the ECB was buying government debt from Member States to keep Italian and Spanish government debt from imploding, German politicians fretted out loud about what exactly the ECB was buying. Among them was Frank Schäffler, at the time Member of the Federal Parliament, who in September 2011 said with uncanny accuracy:

“If the ECB continues like this, it will soon buy old bicycles and pay for them with new paper money.”

This is now coming to pass.

Italy, the Eurozone’s third largest economy, is in a full-blown banking crisis. Four small banks were rescued late last year. The big ones are teetering. Their stocks have crashed. They’re saddled with non-performing loans (defined as in default or approaching default). We’re not sure that the full extent of these NPLs is even known.

The number officially tossed around is €201 billion. But even the ECB seems to doubt that number. Its new bank regulator, the Single Supervisory Mechanism, is now seeking additional information about NPLs to get a handle on them.

Other numbers tossed around are over €300 billion, or 18% of total loans outstanding. .............(more)

http://wolfstreet.com/2016/02/14/italys-banking-crisis-spirals-elegantly-out-of-control/

[Warpy]

1. I don't know if you've been watching financial stocks here

but the big banks here have been taking a beating, especially Bank of America. The big debt calamity in the US is student debt, some of which will never be repaid thanks to offshoring and wage depression.