The Italian financial meltdown that we have been waiting for has finally arrived. For quite a long time I have been warning my readers to watch Italy, and now people are starting to understand why.
Italian banking stocks continued their collapse for a fifth consecutive day on Wednesday, and nervous Italians are beginning to quietly pull large amounts of money out of the banks.
A staggering one-third of their loans are “non-performing”, and the stock price has fallen a staggering 57 percent since 2016 began.
Monte dei Paschi is going to need a major bailout, and the same thing could be said about almost all of the largest Italian banks.
But where is the money going to come from?
As rumors of trouble at Monte dei Paschi spread, Italians are getting money out of the bank while they still can.
The following comes from the Daily Mail…
Some Monte dei Paschi customers have been pulling savings out of the Italian bank, its chief executive said on Wednesday, as it faces a crisis over a mountain of bad loans that has wiped nearly 60 percent off its market value this year.
CEO Fabrizio Viola did not say how much money savers had withdrawn, or when the outflow began, though he said the fall in deposits was “limited” and that the bank could cope with it as he sought to reassure customers and investors.
Italian bank shares have lost 24 percent since the beginning of 2016 as investors, already rattled about global economic growth, have sold out of a sector with low profitability and about 200 billion euros ($218 billion) of loans that are unlikely to be repaid.
And investors are pulling money out of Italian banking stocks at an alarming pace as well. According to the Telegraph, Unicredit is down 27 percent since the start of 2016 and Monte dei Paschi has plunged a total of 57 percent so far this month…
Italian banking stocks crashed again on Wednesday, continuing a month of poor performance and raising questions over the sustainability of the industry in its current structure – and even if it could end up in the same boat as Greece’s banking sector.
Long-suffering Monte dei Paschi’s stock dived another 18.5pc on the day, meaning the shares are down 57pc so far this month.
Even much more stable banks are witnessing a flight of investors – Unicredit’s shares are down 6pc on the day and 27pc since the start of the year.
Overall, the FTSE Italia All-Share Banks Index has plummeted 21 percent over the first three weeks of this year.
We normally only see numbers like this during a major financial crisis, and that is precisely what is happening.
Of course trouble has been building at Italian banks for a very long time. They have been exceedingly reckless, and almost all of them are absolutely saturated with bad loans at this point. Here is more from the Telegraph…
And all of this comes in the context of a much broader European financial meltdown. The carnage that began at the turn of the year continued on Wednesday. Here are some of the specific numbers from Business Insider…
At this point, almost all of the major European indexes have entered bear market territory.
Just check out how far stocks have fallen in some of the largest European nations since their 52-week peak…
United Kingdom: down 20 percent
Netherlands: down 22 percent
France: down 22 percent
Germany: down 24 percent
Turkey: down 24 percent
Italy: down 25 percent
Sweden: down 25 percent
Poland: down 26 percent
Portugal: down 28 percent
Spain: down 30 percent
Greece: down 44 percent
Overall, global stocks have now officially entered a bear market, and panic is spreading fast.
In the last years of the 20th century fraud entered US foreign policy in a new way. On false pretenses Washington dismantled Yugoslavia and Serbia in order to advance an undeclared agenda. In the 21st century this fraud multiplied many times. Afghanistan, Iraq, Somalia, and Libya were destroyed, and Iran and Syria would also have been destroyed if the President of Russia had not prevented it. Washington is also behind the current destruction of Yemen, and Washington has enabled and financed the Israeli destruction of Palestine. Additionally, Washington operated militarily within Pakistan without declaring war, murdering many women, children, and village elders under the guise of “combating terrorism.” Washington’s war crimes rival those of any country in history.
Russia and China now have a strategic alliance that is too strong for Washington. Russia and China will prevent Washington from further encroachments on their security and national interests. Those countries important to Russia and China will be protected by the alliance. As the world wakes up and sees the evil that the West represents, more countries will seek the protection of Russia and China.
The facts of our existence are so different from what is reported that I am astonished. As a former professor of economics, Wall Street Journal editor and Assistant Secretary of the Treasury for Economic Policy, I am astonished at the corruption that rules in the financial sector, the Treasury, the financial regulatory agencies, and the Federal Reserve. In my day, there would have been indictments and prison sentences of bankers and high government officials.
In America today there are no free financial markets. All the markets are rigged by the Federal Reserve and the Treasury. The regulatory agencies, controlled by those the agencies are supposed to regulate, turn a blind eye, and even if they did not, they are helpless to enforce any law, because private interests are more powerful than the law.
Even the government’s statistical agencies have been corrupted. Inflation measures have been concocted in order to understate inflation. This lie not only saves Washington from paying Social Security cost-of-living adjustments and frees the money for more wars, but also by understating inflation, the government can create real GDP growth by counting inflation as real growth, just as the government creates 5% unemployment by not counting any discouraged workers who have looked for jobs until they can no longer afford the cost of looking and give up. The official unemployment rate is 5%, but no one can find a job. How can the unemployment rate be 5% when half of 25-year olds are living with relatives because they cannot afford an independent existence? As John Williams (shadowfacts) reports, the unemployment rate that includes those Americans who have given up looking for a job because there are no jobs to be found is 23%.
The handful of learned people that America has left, and it is only a small handful, understand that there has been no recovery from the previous recession and that a new downturn is upon us. John Williams has pointed out that US industrial production, when properly adjusted for inflation, has never recovered its 2008 level, much less its 2000 peak, and has again turned down.
The American consumer is exhausted, overwhelmed by debt and lack of income growth. The entire economic policy of America is focused on saving a handful of NY banks, not on saving the American economy.