A Run On The Banks Begins In Italy As Italian Banking Stocks Collapse

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Italy Banner - Public DomainThe 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. In particular, Monte dei Paschi is a complete and utter basket case at this point. 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CEO Fabrizio Viola did not say how much money savers had withdrawn, or when the outflow began, though he said the fall in deposits was “limited” and that the bank could cope with it as he sought to reassure customers and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

The analysts estimate the average Texas ratio – a measure of bad loans versus a bank’s capital buffers – of Italian banks stands at around 105pc, compared with just over 50pc in much of the eurozone.

A Bloomberg analysis puts Monte dei Paschi’s non-performing loans at almost one-third of its asset book, followed by Banca Carige at 27.4pc and Banco Popolare at 26.2pc, all cripplingly high levels.

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

European markets dived into the red on Wednesday morning, and they didn’t come back out.

All major stock indexes on the continent had a pretty horrible day, with all but two, the DAX 30 in Germany, and the AEX in the Netherlands, falling more than 3%. The FTSE MIB in Italy, and the FTSE100 here in the UK are the biggest losers.

At the close Italy’s benchmark was down by 4.95% to 17,946 points, while the FTSE100 fell 3.39%, or 199 points.

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 U.S., our markets are still in better shape than most of the rest of the world, so we don’t necessarily understand the severity of the situation quite yet. But let me assure you that what we are facing is incredibly serious. Even at the best of times, most of the major banks in Europe and Asia were on shaky ground, and all it was going to take was a major financial downturn for them to start toppling like dominoes.

Many people are now beginning to speculate that Italy may be the next Greece. Those that are saying this don’t truly grasp what is going on.

Greece is the 44th largest economy on the planet.

Italy is the 8th.

We have already seen how the rest of Europe really struggled to come up with a bailout for tiny Greece.

What in the world are they going to do when Italy goes down?

And of course Italy is not the only one that is going to need help. Financial meltdowns are now erupting all over the continent.

Those that believed that the European crisis was “finished” were sadly mistaken.

The European crisis is not over.

The truth is that the European crisis is just beginning.

Italy will probably be first, but economic and financial problems are going to spread like wildfire.

And by the time it is all said and done, European society is going to be fundamentally altered, trillions of euros will be lost, and the face of the continent will change.

  • rmc9

    …hold on to your butts…

  • Robert

    Govts have two choices it seems. Back off big time with social programs and allow the disaster to run its course. Europe has risen from the ashes before but it will likely be back to pre-EU form. The world will restructure. Lots of pain though.

  • K

    Just how far behind, is Spain and Portugal? Sadly, just the begining.

  • Tatiana Covington

    Funny thing: we’re smart enough to explore other planets, work out relativity, start learning how to cure genetic disorders, control fusion power, even do some of the math for a faster-than-light drive: but we still can’t keep our banks afloat.

    What is it with us and finance?

    • rmc9


    • Paul Patriot

      The lust for and love of money

      • Ted

        I wonder where you got that from? are you trying to glorify yourself or the L-ORD MOST HIGH? You are stealing from WHOM glory belongs. THE L-ORD MOST HIGH does NOT share HIS glory with anyone, so then have you made yourself above or equal to MOST HIGH? blasphemy.

        • Gay Veteran

          off your meds?

          • Ted

            lol thankfully don’t use MED, lol. i am not sure if you know the L-ORD, if you do then don’t forget to honour HIS WORDS. Thus says THE LORD, 1 Timothy 6:10 which is what you were point out. That’s all. but its just how often we use THE WORDS of THE L-ORD only to ignore giving HIM the honour/glory. and thanks for the laugh too.

          • Gay Veteran

            well your LORD ordered the murder of babies, so I won’t be honoring the words of a monster

          • Ted

            ah, can’t you come with something original? what do you call parents who aport their OWN unborn child? what do you call when YOU say to someone, a fool/idiot in the general sense? what you are referring to is NOT a commandment. The commandment says “thou shall not kill/murder”. What in fact occurred is history But today we get the glimpse of the reality past. Many today are in favour of mixing human and animal DNA, in fact it has already started in small scale. Growing human organ in an animal for the purpose or “treatment” is anther example of bringing us closer to the evolution so many are seeking for. Evolution is the realization of animal DNA or electronics mixed within human DNA (old news now). G-D is a just G-D. Much the same way if someone attacks someone you love with a knife you will call upon the justice system, wouldn’t you? asking for justice, so please think before you speak and put away your prejudicious.

          • Gay Veteran

            “ah, can’t you come with something original? what do you call parents who aport their OWN unborn child?….”

            someone NOT claiming to be god

            just what is this “prejudicious”?

          • Ted

            ok so you are going to repeat what i said even though you knew better. BUT the point is that you take what you want and ignore the rest. G-D is Just the same way YOU exercise justice. SIN is unjust. again the commandment is thou shall not kill/murder. THE GOOD news is that the injustice has been paid by Yeshua/Jesus. i am not going in circles with you since you knew better and yet chose to begin your conversation in the way you did.

          • Gay Veteran

            wow Ted, you should work for the corporate media, you sling that BS really good

          • awb22

            So, you’re not pro choice?

          • awb22

            Off yours?

    • Dickie Dawkins

      Smart enough to explore other planets? Hahaha! You mean smart enough to explore movies sets and remote locations like Arizona.

    • A guy from Ukraine

      Very simple – this is the essense of the New World Order, the surrepticious banking cabal to control the world through fiat (as opposed to real money, that is gold and silver) monetary sytem. By conjuring money out of the thin air and and lending it worldwide at interest to turn the world into debt slaves, they have blown up a debt bubble that has finally started to burst. We are in for epoch-making changes and Russia will play a huge role to shape a new more fair world and prevent World Wars from ever happening again.

    • amongoose

      My dad used to say there has to be intelligent life on other planets, because there sure isn’t any here.

    • dchrist81

      Impossible. No bank (nor the banking system) can ever be kept afloat indefinitely. A bank is insolvent from the very first loan it creates with fractional reserve backing. The fractional reserve banking system can not be and should not be “kept afloat”. It should be exposed as a failure and eliminated.

      “The bank creates new money out of thin air, and does not, like everyone else, have to acquire money by producing and selling its services. In short, the bank is already and at all times bankrupt; but its bankruptcy is only revealed when customers get suspicious and precipitate bank runs. No other business experiences a phenomenon like a run. No other business can be plunged into bankruptcy overnight simply because its customers decide to repossess their own property. No other business creates fictitious new money, which will evaporate when truly gauged.” (Murray Rothbard, What Has Government Done to Our Money?)

  • JohnChaos

    Why can’t the “World!” run its banks!, Thats easy it’s ran by Greedy old Dinosaurs Thats call themselves the “ELITE!” in actual fact they’ve been the cause of most of the worlds problems in the first place!,
    The mistake is thinking that these Super Rich Dodo’s actually give a flying monkeys about “US” the everyday working class, that’s why they send us to war after “They” get their Puppets ( Any governmental Body – And i mean Any) to declare war! ( We Are Rich!, So die for us).
    And they are the CANCER of Democrasy! If not to all the Societies
    and Cultures!
    But i think we need to grow up First stop fighting at each other
    and look at the root problem “THEM!”
    I mean look at Goerge Soros(POD), who let that dinosaur out the sediments!

  • Ben

    @Tatiana Covington rmc9 points out greed being a problem. I agree but suggest we go to the root of that. The problem is fear. There is a great belief that our resources are finite and will never ‘be enough’ to support all human life. This belief is founded upon a crafted fiction.

    The reality is there was/is/always will be abundance for all humanity. Let me repeat that. There was/is/always will be abundance for all humanity.

    Humanity as you point out is ingenious. We have great potential to solve most if not any problems that arise. This extends to having knowledge of how to live with nature, in balance. We do know that we can replenish a lot of various resources we consume.

    One example lies in fruits and vegetables. We can continually be growing various plethora of these, in any location on Earth, in any climate. These can supply us with more than ample food. Matter of fact, grains, which are a high value staple to most human diets can and do provide more than ample food.

    Check out “Food First: The Myth of Scarcity” in any good search engine. These folks are non-profit and do a great deal of research on food abundance. From my reading of their materials it seems clear the reason we have any starving in the world, is due to political/social will, or lack to simply take food to people, teach people to grow their own food.

    You can also check out “food waste” in any good search engine. Be prepared to be appalled.

    As to energy, we very could suffice ourselves with a combination of renewable sources. Solar is great for sure but it is not the ultimate panacea in the energy sector. Add it to hydro-electric, wind, geothermal and you start to gather in a full canvas of renewable energy.

    This is what those against renewable energy do, they cherry pick and say, “well all your energy cannot be met by the sun, that’s pure silliness, we must use oil or nuclear”. They refuse to admit there are a plethora of renewable energy sources/methods.

    That does nothing but skew any conversation or attempt to promote renewable energy.

    Medically? Well, Hippocrates stated that our food ought to be our medicine. Considering that as long as humanity has no problem slaughtering animals to consume, he has no problem slaying his brothers either. Maybe Vegan-ism would abolish any war. We would loose our taste for bloodshed in growing and eating plants. I’m sure there’s also adequate research proving a vegan diet is a lot more healthy in general.

    I am not vegan myself but have indeed tried to go vegan. It is thwarted by family continually foisting meat at me. Rather difficult to go against the current of family. Suppose I could if I became resolute in an effort.

    My point being though, fear that there is never ‘enough’ is wholly unfounded. That though, the fear, is what drives greed, hate and a lot of other stupid crap going on. I get so frustrated at times, internally I feel the only solution is to strangle as many stupid as I’m able. No, I do not and will not act on that. It is only a feeling and I am not a feeling nor do feelings control my actions, well not completely at least. I admit to kind of ‘hiding out’ as best I’m able.

    Well apologies for rambling. Excuse me.

  • jacob schot

    Why do we even need banks, especially since we can clearly identify banks (and interest) being the issue?!

    • Pic889

      People need a place to stash their money, so they don’t get stolen from their homes, and are not willing to pay for that, so letting someone invest those money is the only solution.

      The problem is that, when Glass-Steagall was abolished and banks started gambling with depositor’s money instead of investing. There was NO need for bailouts before the abolition of Glass-Steagall.

      • Jac

        How about a Common Monetary Infrastructure (CMI), non profit, where money is created free of interest if the property and your creditworthiness checks out + an obligatory schedule of repaying the “loan” at the rate of depreciation of the property. No inflation, no deflation. People can leave their money in the CMI, no need for investing (funding is available at 0%), and your money will keep its purchasing power (immutability), and your money is safe. Like I said, the privatization of (our hijacked) currency is the issue.

        • Pic889

          And who will keep the lights on for such a CMI? Even if it’s all virtual currency there has to be infrustructure such as servers to validate transactions etc. And to keep the lights on, they either have to charge depositors fees or loan money with interest.

          And loans can’t happen with 0% interest anyway because of the need to cover administration expenses for people who don’t pay and debt collectors have to be sent. There is a reason small banks are failing all over the world and getting absorbed by big banks, and it’s because a steak of bad loans can easily sink them.

          Another reason of course is that even small banks give out risky loans since the Glass-Steagall act was abolished, and that’s the real problem: Risky loans. Can people with no real property still get hold of credit cards btw, or has this crazyness stopped?

  • James Dohnalek

    Financial Armageddon. DEPRESSION. Trillions of euros evaporated and lost forever. Savers now have zero. POOF!!!
    It is all gone!!! NO BAIL OUT, LET IT COLLAPSE. Safeguard the central banks or do you want them to go poof toooooo.