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Italy’s teetering banks will be Europe’s next crisis

economist.com

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Re: Italy’s teetering banks will be Europe’s next crisis

#51

Post by pille »

charlesdm wrote: post #34
pjmlp wrote: post #33

Earlier quoted context omitted.

As a foreign living in Germany I do appreciate the mentality that things "should be done the correct way", but many here don't understand you cannot just change a country's culture by forcing them to strictly follow EU rules. As it has already been proven by the lumping economies in the southern Europe, people will suffer and everyone will just make use of black market for jobs and goods to survive at any cost or jus…

As often with things in life, is there really a correct way? I mean, yes, there are laws saying banks cannot receive state aid, but they were only introduced recently. Does that really mean we should let a massive bank (or multiple banks) go bankrupt? Given the global financial system is so interconnected, only a fool would think this would have no impact to the german economy. I don't mind rules, but every rule is m…

> there are laws saying banks cannot receive state aid > every rule is meant to be broken if the situation warrants it

Why did anyone bother with the rule in the first place then? Wasn't this exactly the kind of situation it was supposed to cover? It's not like an Italian financial crisis was off the radar when this rule got written.

> Does that really mean we should let a massive bank (or multiple banks) go bankrupt?

We've let pretty much everything else go bankrupt in the past eight years. Maybe we should try a it with a bank or two?

> Given the global financial system is so interconnected, only a fool...

That's exactly what the banks said last time to get their bailouts. I think only a fool would believe them again.

(edit: quotes/formatting)

Re: Italy’s teetering banks will be Europe’s next crisis

#52

Post by extrapickles »

ktRolster wrote: post #47
fibo wrote: post #45

the big problem in Italy are taxes, I pay 38%, but for more than 55k you pay 41%, how politicians pretend Italy can survive? In Switzerland you pay 16%.

How can Switzerland survive on 16%? That is my question.

Probably by a higher percentage actually paying the 16%. I bet there are all sorts of tax doges that become worthwhile at 41%.

Re: Italy’s teetering banks will be Europe’s next crisis

#54

Post by pjc50 »

basicplus2 wrote: post #26

EU now requires all member nations to enforce bail-in so ordinary depositors carry same risk as creditors of banks. America - Gone EU - Gone Canada - Gone New Zealand - Gone Australia - nearly gone - Turnbull was head of Goldman Sachs in Australia. All thanks to Goldman Sachs etc http://cecaust.com.au/releases/2014_03_20_Treasury_Bail_In.h... http://cecaust.com.au/releases/2015_11_27_G20_Accepts_Bailin... http://ceca…

> EU now requires all member nations to enforce bail-in so ordinary depositors carry same risk as creditors of banks.

Not true. Even on the one occasion this did happen, Cyprus, the bail-in only applied to value above €150k, hardly the ordinary depositor.

Re: Italy’s teetering banks will be Europe’s next crisis

#55

Post by simonh »

s17tnet wrote: post #19
known wrote: post #17

Euro is nothing but a https://en.wikipedia.org/wiki/Confidence_trick

The whole western bank system is a confidence trick. Never head off fractional-reserve ? https://en.wikipedia.org/wiki/Fractional-reserve_banking

Can you name a banking or finance system that has ever existed that wasn't? Are there non-western banking systems that are better?

Re: Italy’s teetering banks will be Europe’s next crisis

#56

Post by vidarh »

Hermel wrote: post #27
guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

It would already help a lot if the European commission was democratically elected and if the European parliament was given the power to make laws. (It sounds like a joke, but the European parliament cannot propose new laws - even though that's the usual purpose of a parliament. It is the commission that proposes new laws in the EU.)

For that to happen, Europe would need to go federal. You can't have a legislative parliament in the current system because it'd violate the constitutions of a large proportion of the member states to delegate sovereignty somewhere else.

This is the big challenge. People complain about the lack of powers for the EU Parliament, but largely aren't willing to support a model that'd make it possible.

This is also why the EU does not pass laws, and the Commission does not propose laws. It proposes directives, which can then be passed. It is still the national parliaments that passes laws, implementing the directives. This is because no EU organ has the power to legislate directly - to give them that power would require constitutional changes all over the place.

Re: Italy’s teetering banks will be Europe’s next crisis

#57

Post by cdavid »

fibo wrote: post #45

the big problem in Italy are taxes, I pay 38%, but for more than 55k you pay 41%, how politicians pretend Italy can survive? In Switzerland you pay 16%.

I really doubt you only pay 16 % of taxes in Switzerland. When talking about taxes, especially comparing between countries, you need to be very careful about what you are talking about.

FWIW, income taxes are 40 % for income above ~32k, and the UK are not considered heavily taxed in Europe.

Re: Italy’s teetering banks will be Europe’s next crisis

#58

Post by bonzini »

simonh wrote: post #50
charlesdm wrote: post #34

Earlier quoted context omitted.

As often with things in life, is there really a correct way? I mean, yes, there are laws saying banks cannot receive state aid, but they were only introduced recently. Does that really mean we should let a massive bank (or multiple banks) go bankrupt? Given the global financial system is so interconnected, only a fool would think this would have no impact to the german economy. I don't mind rules, but every rule is m…

You manage a German bank. You follow strict capitalisation rules, are careful about the loans you make and operate your business according to the highest principles. You clients start doing more and more of their business with an Italian bank that has poor capital reserves and a shoddy loan book and is losing money, but offers better terms to customers. The bank looks like it's going to fail, so the Italian governmen…

> You manage a German bank. You follow strict capitalisation rules, are careful about the loans you make and operate your business according to the highest principles.

Like Deutsche Bank? They were chock-full of bad derivatives, Greek bonds, and whatnot.

Most of Italy's big banks are fine. They went just fine through the subprime crisis and the Greek bond crisis, and the government never had to save them.

It's the smaller banks that have problems.

Re: Italy’s teetering banks will be Europe’s next crisis

#59

Post by mrighele »

simonh wrote: post #50
charlesdm wrote: post #34

Earlier quoted context omitted.

As often with things in life, is there really a correct way? I mean, yes, there are laws saying banks cannot receive state aid, but they were only introduced recently. Does that really mean we should let a massive bank (or multiple banks) go bankrupt? Given the global financial system is so interconnected, only a fool would think this would have no impact to the german economy. I don't mind rules, but every rule is m…

You manage a German bank. You follow strict capitalisation rules, are careful about the loans you make and operate your business according to the highest principles. You clients start doing more and more of their business with an Italian bank that has poor capital reserves and a shoddy loan book and is losing money, but offers better terms to customers. The bank looks like it's going to fail, so the Italian governmen…

How is this different from European governments buying Greek bonds held by German banks [1] ? (Banks from French and Italy got similar treatment, but German banks where the biggest lenders)

[1] http://www.bloomberg.com/view/articles/2012-05-23/merkel-sho...

Re: Italy’s teetering banks will be Europe’s next crisis

#60

Post by znpy »

ktRolster wrote: post #47
fibo wrote: post #45

the big problem in Italy are taxes, I pay 38%, but for more than 55k you pay 41%, how politicians pretend Italy can survive? In Switzerland you pay 16%.

How can Switzerland survive on 16%? That is my question.

It's easy: every one is paying that 16%.

Taxes can be low if everyone (no matter their size, big or small) pay them.

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