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RE: Too big to save? How Italy's banking system could lead to the unravelling of the European Union..!!

in #news8 years ago

Too big to fail is a perplexing problem - Lehman was the trigger for the GFC. It would be nice to believe that the world's financial and monetary leaders would have learned from this. And around the world they have. Banks have been cleaned up all over the place EXCEPT in Italy.

Now Italy has had a growth problem. Some will say it came from joining the EURO in 1999. This chart shows that it was a bit of a problem before that. In the 20 years before 1999, GDP growth went over 2% only once.

http://www.tradingeconomics.com/italy/gdp-growth

Now the Italian Government knows that too big to fail is a problem - so they voted to approve a bailout.

Italy approves a €20bn bailout plan for its banks

http://www.bbc.com/news/business-38391967

This suggests to me they have learned part of the lessons of the GFC. Question is will they learn the next part - fix the banks? Maybe this time they will. The problem is if they do not is Italy could well follow the path of Greece. This is way worse for Europe because Italy is way bigger than Greece in economic terms.