{"id":21380,"date":"2016-07-05T18:56:09","date_gmt":"2016-07-05T23:56:09","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21380"},"modified":"2016-07-05T18:56:09","modified_gmt":"2016-07-05T23:56:09","slug":"investor-fears-spike-as-italy-and-the-eu-inch-closer-to-doomsday-scenario","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21380","title":{"rendered":"Investor Fears Spike as Italy (and the EU) Inch Closer to Doomsday Scenario"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/07\/04\/investor-fears-spike-italy-europe-inch-closer-to-doomsday-scenario-bank-run-dei-paschi-unicredit\/\">Investor Fears Spike as Italy (and the EU) Inch Closer to Doomsday Scenario<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Risk of contagion in Italy and far beyond would be huge.<\/strong><\/p>\n<p>Just how low can Italian bank shares go? That\u2019s the question plaguing the minds of European investors, policy makers, bankers and central bankers. Today the shares of the country\u2019s third largest publicly traded bank, Monte Dei Paschi, plunged 14% to \u20ac0.33, their lowest point ever. Two years ago, they ran\u00a0between \u20ac5 and \u20ac9.<\/p>\n<p>The reason for the latest plunge was news that the ECB had sent the bank a letter urging it to draw up a plan for tackling its bad-loan burden. The lender is being asked to reduce its load of curdled debt by \u20ac10 billion to \u20ac14.6 billion by 2018. That\u2019s a big ask even in the best of times, and these are certainly not the best of times for Monte Dei Paschi.\u00a0<a href=\"http:\/\/www.bloomberg.com\/gadfly\/articles\/2016-07-04\/paschi-shows-ecb-must-be-flexible-with-italy-s-bank-crisis\" target=\"_blank\">According to<\/a>Bloomberg, its loan loss provisions would represent over 95% of its operating profits.<\/p>\n<p>No bank in Europe has fallen so low, so fast, without completely crashing and burning. On the eve of the global financial crisis, Monte Dei Paschi was worth \u20ac15 billion. Now its market cap is just over \u20ac1 billion. The only reason it\u2019s still alive today are the multiple taxpayer-funded bailouts it has received, and all they seem to have achieved is to postpone the inevitable (and prolong the taxpayers\u2019 suffering).<\/p>\n<p>Earlier this year, Italy\u2019s government was given the go-ahead to set up a bad bank in which to bury some of Italy\u2019s most toxic financial waste. It was a \u20ac5 billion solution to a \u20ac360 billion problem, as\u00a0<a href=\"http:\/\/wolfstreet.com\/2016\/01\/27\/who-pays-for-the-italian-banking-crisis\/\" target=\"_blank\">we warned at the time<\/a>\u00a0\u2013\u00a0far too little, far too late.\u00a0Last week the EU, in a fit of desperation, authorized the country to use \u201cgovernment guarantees\u201d to create a \u201cprecautionary liquidity support program for their banks.\u201d<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Investor Fears Spike as Italy (and the EU) Inch Closer to Doomsday Scenario Risk of contagion in Italy and far beyond would be huge. Just how low can Italian bank shares go? That\u2019s the question plaguing the minds of European investors, policy makers, bankers and central bankers. Today the shares of the country\u2019s third largest [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[63,5660,233,281,282,1464,12817,4255],"class_list":["post-21380","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banks","tag-don-quijones","tag-ecb","tag-europe","tag-european-central-bank","tag-italy","tag-monte-dei-paschi","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21380"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21380\/revisions"}],"predecessor-version":[{"id":21381,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21380\/revisions\/21381"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}