{"id":22402,"date":"2017-01-02T13:17:47","date_gmt":"2017-01-02T18:17:47","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22402"},"modified":"2017-01-02T13:18:14","modified_gmt":"2017-01-02T18:18:14","slug":"who-exactly-benefits-from-italys-ballooning-bank-bailout","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22402","title":{"rendered":"Who Exactly Benefits from Italy\u2019s Ballooning Bank Bailout?"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/12\/30\/who-benefits-from-italys-bank-bailout\/\">Who Exactly Benefits from Italy\u2019s Ballooning\u00a0Bank Bailout?<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p>Italy\u2019s third largest bank, Monte dei Paschi di Siena, is not insolvent, according to the ECB; it just has \u201cserious liquidity issues.\u201d It\u2019s a line that has already been heard a thousand times, in countless tongues, since some of the world\u2019s largest banks became the world\u2019s biggest public welfare recipients.<\/p>\n<p>In order to address its \u201cliquidity\u201d issues, Monte dei Paschi (MPS) is about to receive a bailout. The Italian Treasury has said it may have to put up around \u20ac6.6 billion of taxpayer funds (current or future) to salvage the lender, including \u20ac2 billion to compensate around 40,000 retail bond holders.<\/p>\n<p>The rest will come from the forced conversion of the bank\u2019s subordinated bonds into shares. According to the ECB, the total amount needed could reach \u20ac8.8 billion, 75% more than the balance sheet shortfall originally estimated by MPS and its thwarted (but nonetheless handsomely rewarded) private-sector rescuers, JP Morgan Chase and Mediobanca.<\/p>\n<p>All these events conform to a well established script. The moment the \u201ccompetent\u201d authorities (in this case, the ECB and the European Commission) agree that public funds will be needed to prop up an ostensibly private financial institution that is not too big to fail but nonetheless cannot be allowed to fail, the bailout costs inevitably soar.<\/p>\n<p>And this is just the beginning. According to Italy\u2019s Finance Minister Pier Carlo Padoan, the Italian government has already authorized a \u20ac20-billion fund to support Italy\u2019s crumbling banking sector, with up to eight regional banks lining up for state handouts. In addition, MPS plans to issue \u20ac15 billion of new debt to \u201crestore liquidity\u201d and \u201cboost investor confidence,\u201d as several Italian newspapers reported on today.\u00a0That debt will be guaranteed by the government and its hapless taxpayers.<\/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>Who Exactly Benefits from Italy\u2019s Ballooning\u00a0Bank Bailout? Italy\u2019s third largest bank, Monte dei Paschi di Siena, is not insolvent, according to the ECB; it just has \u201cserious liquidity issues.\u201d It\u2019s a line that has already been heard a thousand times, in countless tongues, since some of the world\u2019s largest banks became the world\u2019s biggest public [&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":[11066,63,195,5660,1464,12817,4254,4255],"class_list":["post-22402","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-bailout","tag-banks","tag-debt","tag-don-quijones","tag-italy","tag-monte-dei-paschi","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22402","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=22402"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22402\/revisions"}],"predecessor-version":[{"id":22404,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22402\/revisions\/22404"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}