Rules are rules, unless of course they aren’t.
Brussels has rules on budget deficits, widely ignored by Spain, France, Greece, and historically even by Germany.
Brussels also has new rules on bank bailouts. Four times Brussels refused Italian Prime Minister Matteo Renzi’s request for a state sponsored bailout of Italian banks because it’s against the rules.
Renzi threatens to go ahead anyway. And if he does, who can stop him?
Please consider Renzi Ready to Defy Brussels and Bail out Italy’s Troubled Banks.
Matteo Renzi, the Italian prime minister, is determined to intervene with public funds if necessary despite warnings from Brussels and Berlin over the need to respect rules that make creditors rather than taxpayers fund bank rescues, according to several officials and bankers familiar with their plans.
The threat has raised alarm among Europe’s regulators, who fear such a brazen intervention would devastate the credibility of the union’s newly implemented banking rule book during its first real test.
Italy is the eurozone’s biggest vulnerability following the shock outcome of the UK vote to leave the EU, with bank stocks plunging by a third. Concerns are building before the outcome of bank stress test results due this month and a constitutional referendum in Italy in early October, on which Mr Renzi has wagered his job. Citi has described the referendum as “probably the single biggest risk on the European political landscape this year outside the UK”.
After several of its ideas on intervention were rebuffed, Rome is considering whether to act alone. “We are willing to do whatever is necessary [to defend the banks], and do not rule out acting unilaterally, although that would only be as a last resort,” said one person familiar with the government’s thinking.
Brussels last week signed off €150bn worth of precautionary measures allowing Italy to help banks with short-term liquidity problems. But of greater concern is pressure on capital, say analysts. Stress test results are due on July 31 and senior bankers consider Italy’s weaker banks — including its third largest Monte dei Paschi — may be found to be undercapitalised.
Italy’s business lobby, Confindustria, on Friday warned of “political chaos” should Mr Renzi lose October’s referendum. Under such a scenario, Italy would re-enter recession, spreads on Italian debt would widen and there would be capital flight from Italy, Confindustria argued. Italian gross domestic product would fall 0.7 per cent in 2017 and drop a further 1.2 per cent in 2018, it added.
Merkel-Renzi Showdown.
Last week German chancellor Angela Merkel refused Renzi’s plans to bail out Italian banks for the fourth time.
Merkel chastised Renzi, “We wrote the rules for the credit system, we cannot change them every two years.”
Italian banks are insolvent. For details, please see Italy’s Zombie Banks on Death Bed, Bail-Ins Coming?
Arguing is over how to lie about the obvious, and how to bail out the banks against the rules.
There’s massive infighting over nearly everything now.
British news outlets admit Merkel Ready to Boot Juncker.
Renzi is now prepared to defy Merkel. And Beppe Grillo, Italy’s Eurosceptic Five Star Movement leader stands on deck, ready to replace Renzi if depositors are bailed in.
OK chancellor, what the hell are you going to do if Renzi goes ahead?
The likely answer is “breathe a sigh of relief” no matter how she publicly expresses herself.
Mike “Mish” Shedlock
Leave it to the usual Insider-Idiot coalition to still, after all this, remain duped enough to fall for the sham that “The Banks” are something useful that is worthy of “saving.”
The tiny, tiny sliver of time critical, necessary services provided by today’s banks (really just payment mediation and short term trade credit), would be up and running in no time. In an improved fashion. Without productive Italians being stuck with the boat anchor around their ankles that is the nothing-but-a-governemnt-sponsored-and-Fed-funded-theft-racket that constitutes the entire remainder of contemporary “finance.”
The trillions upon trillions of dollars in unregulated derivative contracts masquerading as “insurance” would seem to agree.
Good: Boot Junker
Better: Boot Merkel
Best: Boot the EU
NEVER let it rest!
How “The Endgame” will play out across the EU (and eventually the entire bankrupt G20) becomes a little more obvious each day.
Serial banking crises that each get “bailed out” by already insolvent governments, pouring public “money” (that does not exist) into a series of financial black holes, which eventually take governments and currencies down with them.
One would think that the Italian voters would be tired of bailing out the banks by now.
FROM: Frau Merkel and Monsieur Hollande
TO: Monsieur Renzi
SUBJ: Cutting in line
Sir — The fascists in Brussels have told us of your plans to bail out your insolvent banks without bailing out our insolvent banks first. This is unacceptable. We didn’t want to do this, but you leave us no choice. If you try to cut in line ahead of us, the following WILL happen to you:
1) We will pay for JC Juncker to holiday in Italy, where he will drink all your wine and empty all your liquor cabinets.
2) We will send Mario Draghi back to Italy, where he will advise you on economic matters.
You have 24 hours to surrender…
Would appear the President misspoke when he said Great Britain would have to go and i quote “to the back of the bus.” He apparently meant to say Italy. Or is it Spain? Hard to tell with that guy. Just print another trillion in debt and blow the entire State of Illinois to oblivion…then everything will be fine I’m sure. Heck we won’t even have a bus anymore! It’s all good. No car, not even shoes. Well…$5,000 Nikes …. but besides that no shoes.
Where are all those combat boots from the trillions spent so far in this war anyways? We already know where the money has gone…and sadly that isn’t Illinois either.
Boot the EU and go back to your old ways: World War II, World War I, Franco-Prussian War, Napoleonic Wars, Seven Years War, One Hundred Years War, Spanish Armada, Punic Wars,etc
1800s: short Corsican guy takes power in Paris, declares himself global ruler, launches war on Europe, army freezes to death in Russia
1900s: short Austrian guy takes power in Berlin, declares himself global ruler, launches war on Europe, army freezes to death in Russia
2000s: drunk Luxemborg guy takes power in Brussels, declares himself global ruler, ….
…. but Europe hides their liquor, the EU doesn’t have an army, and Putin is busy reading Hillary’s un-redacted emails
Forgot that EU was built on peace, nothing better for dictatorship than the threat of war.
European countries have as many psychopaths per capita as other political entities so organizing them into some kind of giant terrorist organization like the US is not the solution.
There is no good size for government but the smaller the better.
Europoly.
Go directly to Brussels, do not pass go, collect 200 migrants.
When Canada was flirting with disintegration the joke was a Canadian flag with below the maple leaf emblazoned:
Technically A Nation.
Banzai should do one for the EU.
You spread wide your wings, Mike, amazing your friends would link up the famous Italian journalist (whose O! America is the story of arriving in NY & Jan 1929 to work for a paper near where I grew up) with the Barzini killing in The Godfather –
Your new format is superb with enough lampooning to make you a worthy successor to Jack Benny, Fred Allen, Red Skelton, Henry Morgan & Sid Caesar, all of whom disappeared from Old Time Radio when I returned from the Berlin Wall escapade so well described by Frederick Kempe in BERLIN ’61 to be replaced by a high school friend selling Wonder Bread, although I cannot imagine your having time to read…
Keep on trucking’ until you’re replaced by a robot,,
Bill
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“Matteo Renzi, the Italian prime minister, is determined to intervene with public funds if necessary despite warnings from Brussels and Berlin over the need to respect rules that make creditors rather than taxpayers fund bank rescues, according to several officials and bankers familiar with their plans.”
Those creditors are the depositors.
The dictators of the G20 changed the rules for depositors, without their consent. Depositors have not even been informed of the change in rules.
Tax payers, without their consent, have been placed on the hook for losses by banks with huge derivative exposure, such as felon bank JP Morgan.
Well stated.
EU Central Planning bureaucrats want a bail-in, which will deprive companies and individuals of cash, reduce employment and sink the economy deeper.
Locals want to spread the pain amongst the taxpayers. What are the consequences of a little more government debt?
For some reason, EU wants to impose a Greek, Cyprus banking solution. One must presume that EU/ECB somehow benefit from bank deposit confiscations. This lack of EU flexibility shows the wisdom of Brexit, and the reason why it is irreversible and more countries will follow.
What I find so disgusting is these same politicians telling Greece nothing but reform and austerity will help them. Yet when their country come into the crosshairs they want to do just like Greece wanted to do. The rules only apply it appears only when your country is solvent. Once your country is in trouble screw the rules, and at the same time make Greece and other countries with bailouts follow these same darn rules concerning finances.
Honestly I do not blame countries for wanting out of the EMU as there will never be a union where sovereign countries of the EMU balancing other countries in trouble like we do in the USA. Some states in the USA well I should have types most states in the USA spend more greenbacks then they ever send to the Fed. Fours states are currently in the black. But we taxpayers adhere to the same rules when dealing with income taxes. Something the EMU does not do. They punish countries and this may well be their downfall in the future.
A united states of Europe will most likely never happen because EM countries will never hand off total sovereignty to unelected officials in Brussels. I was in Europe when the Euro was being discussed in Germany and this came up time and time again. Germany is loving the Euro now because well their DM would be sky high right now.
The EMU and EU countries cannot even sort out their finances, how will they ever solve anything else. Many have closed their borders to refugees and I do not blame them. Many cannot even agree on tax collection, retirement age and other social programs.
The British did the correct thing as did Iceland, they got out while they still could and even now the EU is pressuring GB to do another vote. 27 unelected officials with legal immunity running the show sounds more and more like a dictatorship to me. Democratic my arse.
The infighting is increasing. Nations are openly threatening to put themselves ahead of the Brussels Europoly. This dance is definitely heading to disintegration, but not in a linear fashion.
Ah, yes, the comparative case still lives despite our PC world…..
Theft is the greatest labor savings ever devised by man.
England, Spain, France, Italy, Germany, Austria, Russia.
At one time or another each nation thrived by conquest, enslavement, and theft.
Politicians thrive in lieu of conquest by debasing the currency and enslaving their own people.to debt and taxes.