What am I talking about? This.
Now on the surface it seems like a pretty normal thing, stressed bank runs out of cash and has to be recaptialised. It happens and, normally, things go on.
But let's stop for a second and re-think this. For the last 6 years the ECB has been doing stress testing on all the major banks in the EU. These stress tests are supposed to simulate another situation like the Global Financial Crisis and the banks are supposed to carry enough capital and assets to weather it without damaging investors.
Every Major EU bank has passed pretty much every ECB stress test.
So, I wonder, how does a truly major Bank in Italy pass the stress test whilst being in the middle of a recaptialisation "three times" since 2014. Note this is not a sale of assets, this is a sale of debt on which the major part will have to be financed by paying interest on it.
In the words of the article..
The health of the lender poses a threat to the wider Italian banking system, the euro zone's fourth largest
So that would be a prime candidate for passing a stress test right?
So who is lying to whom and how many lies have been told which are going to come home to roost? Italy is the Euro Zones third largest economy. Fully $2 Trillion. Italy has recorded virtually 0% growth since the 1990's and it's banking system is in chaos.
All is not well in the state of the Euro Zone. Yet the UK is the one in trouble. Apparently... The BOE talks of "A stitch in Time". We may yet see Brexit as a whole wardrobe of "stitches in time"....
