Monday, June 27, 2016

Minsky Aftermath; "Rome Mulls Capital Injection to Support Italian Banks After ‘Brexit’ Shock"

"The Italian government is considering a capital injection for the country’s banking system...after Italian lenders were hit by a sharp selloff in banking stocks...triggered by Britain’s vote to leave the European Union.

...the intervention could add up to €40 billion ($44.39 billion) in capital to the banking sector, which is struggling under the weight of €360 billion in bad loans, chronically poor profitability amid record-low interest rates, thin capital buffers and high costs.

About US $400 billion in bad loans?

The bad loans didn't mean much before last Friday

...The use of public funds to shore up the banking system is prohibited under European laws, if losses on shareholders, bondholders and uninsured depositors aren't imposed beforehand.

The people said the government could invoke an exception to this rule under European law during exceptional market conditions...

Laws don't mean much anymore

Tyranny of the elite, this looks like

...Such intervention would be a welcome move for banks which have been struggling to reduce their massive exposures to soured loans.

Loans they never should have made in the first place, 
many full of fraud which enriched those who got the money 
and those who sold them, who now want everyone else to pay for mistakes, 

Investors have so far been unwilling to pay the prices banks were asking to sell their bad loans.

Another bank bailout without the shareholders and depositors taking hits

Same as 2008 and 2009

Nothing was fixed, just a bunch of cans which got kicked,
making today's situation much worse

...Banks have so far refused to [write down bad loans] as they believe the market price of bad loans should be higher...

Wall Street Journal

The way this reads, 
the executives who are/were responsible will pay no price, again

Coming to America