Eurozone

A Furious Italian Prime Minister Slams Deutsche Bank As Europe's Most Insolvent Bank

Speaking at a joint news conference Italy's Prime Minister Matteo Renzi said "other European banks had much bigger problems" than their Italian counterparts "If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred."

World's Biggest Asset Manager Downgrades European Banks To Sell, Expects Global Slowdown

"We have trimmed our global growth expectations, and now expect a modest slowdown over the next 12 months. We see risk of a UK recession and European slowdown, as Brexit uncertainties weigh on sentiment. Our new BlackRock Macro GPS “nowcasting” indicator suggests Brexit-related uncertainty has already started to negatively impact UK and global economic growth. We have downgraded European stocks to underweight, with a negative view of the eurozone banking sector."

Can The EU Survive As A Prison? Who Has The Keys?

Jean-Claude Juncker and Angela Merkel want to make the EU a prison. The Eurozone was designed as a prison from the beginning. But the cat is finally out of the bag. And voters know they have the key.

A Look Inside Europe's Next Crisis: Why Everyone Is Finally Panicking About Italian Banks

Back in May 2013, we wrote an article titled "Europe's EUR 500 Billion Ticking NPL Time Bomb" in which we laid out the biggest danger facing European banks: non-performing loans. As of this moment, that time bomb may have finally gone off: as the WSJ writes overnight, the Brexit damage to the rest of Europe "could be more immediate and potentially more serious. Nowhere is the risk concentrated more heavily than in the Italian banking sector." Indeed, "Brexit could lead to a full-blown banking crisis in Italy." Here's why.

Brexit Blowback - The Panic Will Start With Property

The problem lies mostly with the human tendency to avoid short-term pain...Unless it is accepted that demand must be tied to income growth, and not extra debt, we’re never getting out of this one. The current disconnect between high asset prices, stagnant incomes and increasing, overall debt levels, is both economically and politically unsustainable. And what is the ultimate result? Brexit politically and economically there is no housing market for our young workers.

"We Won't Be Lectured" - Italy's Renzi To Defy Brussels Over Banking Bailout

With all eyes distratcted by the post-Brexit euphoria, the last week has seen a far more existential crisis accelerating in Europe. Italy's banking system is in tatters (from a EUR40bn bailout 6 days ago, to EUR150 emergency support 3 days ago, to chatter of further support from pension funds Friday) but, in what seems like a clear admission that things are really bad, The FT reports that Italian prime minister Matteo Renzi is prepared to defy the EU and unilaterally pump billions of euros into its troubled banking system if it comes under severe systemic distress, a last-resort move that would smash through the bloc’s nascent regime for handling ailing banks.

Price Discovery - R.I.P.!

But the destruction of price discovery in the sovereign debt market is not simply an academic curiosity to be jawed about by the few remaining fiscal scolds in the world. To the contrary, it is already having massive toxic consequences in the arenas of fiscal governance and capital markets alike.

Italy Just Bailed Out Another Failed Bank, May Use Pension Funds For Future Bank Rescues

Overnight, yet another failed Italian bank was bailed out. As the FT reports overnight, Atlante, Italy's privately backed €5bn bank bailout fund which was created in April to stem the threat of contagion from struggling lenders and whose assets turned out to be woefully inadequate, took control of Veneto Banca after a €1bn capital increase demanded by EU bank regulators attracted zero interest.

Bob Janjuah Explains All That Is Wrong With The Financial System (And Remains Bearish)

"By dumping the responsibility for the heavy lifting for growth on central banks, we have ended up with asset bubbles, rampant speculation, lack of investment in productivity and in the real economy, significant levels of financial engineering to artificially boost earnings, and merely the (now failed) hope that “trickle down” still works. The outcome has been almost unprecedented levels of rising inequality in the global economy.  I suspect that it is this inequality that was behind a fair chunk of last week’s Brexit outcome and which has driven the rise of extremism across other important nations/blocs."

Explaining Social Anger, Brexit, Donald Trump In One Chart

Voters are angry. Donald Trump, Marine Le Pen, Nigel Farage, UKIP, and the AfD party in Germany have all been accused of stirring up anger and hatred. But anger is not the problem. None of those individuals or political parties are the problem. Income inequality, the shrinking middle class, angry voters, and the rise of extreme political parties are all symptoms of the real problem: Central banks and their inflationary policies.

If The UK Economy Tanks, Don't Blame Brexit

Last Thursday, the people of Britain voted in a referendum to leave the European Union (EU). Most commentators view Britain’s exit (“Brexit”) from the European Union as bad news for economic growth in the UK and the eurozone. As a result, it is argued, the growth rate in the rest of the world will be also badly affected. It is more likely that, whether the pace of real economic growth over time will weaken or strengthen is going to be set by the pace of expansion in the pool of real wealth.