It remains up in the air whether the new 150 billion euro liquidity fund will help to stabilize the Italian banking sector… Grab your popcorn, folks, this should be one hell of a summer.
by James Corbett
The International Forecaster
Oil is crashing back down, precious metals are continuing their climb (although not for lack of manipulation), US treasury yields are hitting record lows and stocks are failing to break previous highs as the Brexit fallout continues to settle on the markets. But for the moment all eyes are turned to Italy, where the next shoe may be about to drop.
[…] Specifically, the shoe is dropping in the Italian banking sector, where bad loans are the nemesis of the day. As the Wall Street Journal reports:
“In Italy, 17% of banks’ loans are sour. That is nearly 10 times the level in the U.S., where, even at the worst of the 2008-09 financial crisis, it was only 5%. Among publicly traded banks in the eurozone, Italian lenders account for nearly half of total bad loans.”
The WSJ blames this on the “lax lending standards” of Italian banks before quoting Lorenzo Codogno, the former director general at the Italian Treasury: “Brexit could lead to a full-blown banking crisis in Italy. The risk of a eurozone meltdown is clearly there if Brexit concerns are not immediately addressed.”