Italy Approves 1.2% Of GDP To Save It’s Troubled Banks… Again! Exactly As We Warned Last Year

I’ve been warning about Italy’s troubled banks since 2010, and last year I pushed two very detailed reports about what was essentially Italy’s Bear Stearns and Lehman Brothers. Italy is a mess and the IMF and EC have been too optimistic regarding its prospects for 7 years (not just lately), see Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! Fast forward to today and Bloomberg reports: Italy Approves $21 Billion Fund to Shore Up Its Troubled Banks

Italy’s parliament approved a law to plow as much as 20 billion euros ($21 billion) into Banca Monte dei Paschi di Siena SpA and other troubled lenders as part of the nation’s efforts to revamp its banking industry.

The lower house gave its final approval to the legislation Thursday, converting the decree law passed by Prime Minister Paolo Gentiloni’s cabinet in December. It includes emergency liquidity guarantees and capital injections for struggling lenders in compliance with state aid rules. Banks will be able to request precautionary recapitalizations that would see some bondholders take a hit.

… Italy’s banks are struggling under the weight of a 360 billion-euro mountain of bad loans, a plight that has eroded profitability and undermined investor confidence. Taking Monte Paschi into public ownership, which would be Italy’s biggest nationalization since the 1930s, could be followed by rescues of lenders including Veneto Banca SpA and Banca Popolare di Vicenza.

 Keep in mind that Italy’s GDP is only $1.8 trillion, meaning that it will put over 1% of its GDP into bailing failing banks, for the second time in 7 years!

I have warned about Italian banks since 2010, but the IMF/EC said things were getting better.  The IMF has always been overly optimistic when it comes to Italy.

As I’ve said, I’ve been warning about Italy’s troubled banks since 2010. During the months of March and April of 2016 we released a series of proprietary research reports indicating significant weaknesses that we found in the European banking system and released it for sale through the blockchain (reference The First Bank Likely to Fall in the Great European Banking Crisis). This was performed by the same macro forensic and fundamental analysis team that first warned about the pan-European sovereign debt crisis in 2009 and 2010 (reference warning about Italy’s troubled banks since 2010) as well as Bear Stearns and Lehman Brothers (Is this the Breaking of the Bear? January 2008).