Italian Bad Loans Surge 26% YoY To Record High (59th Month In A Row)

Tyler Durden's picture


Welcome to the recovery. For the 59th month in a row, the stock of bad loans across Italian banks rose (up ~26% YoY). At EUR 164 billion, this is a new record high and remains the biggest problem for Italian banks (non-performing loans now make up a reord 8.6% of total lending) as they suggest in their reports that profitability is improving. If that was not enough to have you piling cash into the heart of Europe's periphery, then the 22nd month of declines in loans to the private sector should do it. Despite a pick up in mortgage loans, private credit creation tumbled 3.1% YoY in April... not exactly the quasi-Keynesian dream that record low rates would suggest as transmission mechanisms remain entirely plugged.


Bad loans are up 26% YoY to a new record EUR 165 billion...


Private credit creation contonues to crater - 22nd month in a row and -3.1% YoY


Welcome to the recovery...


Charts: Bloomberg

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Tue, 05/20/2014 - 09:35 | 4777100 PR Guy
PR Guy's picture



They clearly need to get a better understanding of what the word 'profit' actually means:



Tue, 05/20/2014 - 09:45 | 4777161 Headbanger
Headbanger's picture

Mama mia!!  That's a spicy meatball!

Sometimes you eat more than you should.....


Tue, 05/20/2014 - 09:46 | 4777169 Haus-Targaryen
Haus-Targaryen's picture

Where is Gordo when you need him?  I'd love his take on why this is actually a good thing, and the Euro is fixed, and its awesome, and super, and neat.

Tue, 05/20/2014 - 11:18 | 4777535 Ghordius
Ghordius's picture

it's Ghordius, not Gordo. From Gordius, or Gordias, the father of Midas, founder of Gordium and the iron/gold standard and maker of the Gordian Knot. And please don't put words in my mouth

Have you any idea how many times since 2012 Tyler has updated those statistics? go and search and you'll see I have commented half of them

anyway, for you lazy youngster: what is Tyler saying with the second statistic? that Italians are getting out of debt. Which is more or less what you'd expect, in a monetary, economic and cultural/historic environment as the current Italian one

"Bad Loans Surge 26% YoY To Record High (59th Month In A Row)" sounds terrific, yet look again: bad loans are short of 10% of the loan books. bad, yet not catastrophic, and heavely dependent from the fact that SMEs are delaying payments across the board

and again: why should Italians get moar into debt? to please bankers? because they are expecting inflation to clear their debt, like some Britons and Americans?

Tyler also writes "not exactly the quasi-Keynesian dream that record low rates would suggest as transmission mechanisms remain entirely plugged"

to which I'd have to ask: which part of the ECB's or continental policies are Keynesian? all in all, I see Austrian School policies, though we don't call them this way. with the exception of the ultra-low rates, which can't be changed without shutting out dollar investments, ergo a result of the FED's policies and USD reserve currency hegemony

I repeat: it's this Tyler that sounds like a Keynesian bankster by shouting "OMG! no debt growth!!!"

Tue, 05/20/2014 - 11:24 | 4777609 Haus-Targaryen
Haus-Targaryen's picture

We both look at the EU and its respective institutions wearing rose colored glasses. You like to see the good, and I enjoy seeing the bad.

Seems to me like bad mortgage rate in 2008/2009 in the USSA was around 12%, which was catastrophic.  Yet, 10% here isn't that bad? So lets just go with the 10% figure, as its easy to work with, and other than basic math, I don't have to start citing sources. 

So a 26% rise in what is now 10% of a whole (100%) is coming in, according to my TI-83+ at over 2%.  So, in one month -- bad loans, when taken as a whole of the entire set rose by 2% -- in 30 days, or the eqivlant of almost 30% of the entire set before this new addition. 

When we are talking about macro-finance small changes can lead to large results.  If bad loans were 30% (or pick whatever number you would consider to be material), and Italy had that number, your precious project would have major issues to deal with. 

End the EU and EMZ.

The fact of the matter is that these problems Italy has ARE material. 

Tue, 05/20/2014 - 12:13 | 4777790 Ghordius
Ghordius's picture

I see a lot of bad sides on both the EU and the EZ. if you would read what I wrote in the last years instead of being mesmerized by my avatar...

Tyler wrote "non-performing loans now make up a reord 8.6% of total lending", not 10%. I wrote "under 10%", and now you have provided a benchmark: "Seems to me like bad mortgage rate in 2008/2009 in the USSA was around 12%, which was catastrophic" and frankly I don't understand your argument which echoes Tyer's "hockey stick" one on the other article today, or that vague "When we are talking about macro-finance small changes can lead to large results"

and yet again, the ZH article is about total lending, which is structured and/or collaterized differently on both continents, leading to further comments from yours truly, all for you to read if you search them

seriously, are you here because of the enjoyment or because of a search for truths and facts? if it's for the first, then please stop bothering me. or read back what I wrote in 2012 and 2013, and compare to what ZH's position was, what the general commentariat wrote. "rose colored glasses" my hat

Tue, 05/20/2014 - 12:31 | 4777849 Haus-Targaryen
Haus-Targaryen's picture

8.6% of total lending is 8.6% of total lending.  26% of 8.6% is 2.3%. 

Meaning, out of total outstanding debt in italy, last month, bad debts increased by 2.3%.

I am talking about total lending as well, as the 8.6% isn't a relevant number when computing m/o/m changes, other than acting simply as a denominator.  Its the 2.3% which is a big deal. 

So CURRENTLY their bad debt are 8.6% (of the whole) and of that 8.6%, 2.3% of it (of the whole) was added in the past month.  This is a material change. 

So while your verdict on me is out, mine is out on yours as well.  Admittadly you have a much better economic argument for the stupid monopoly money I have in my wallet right now, than most supporters of the currency union -- that being said, I ask myself often, are you a pragmatist or idealist. 

Some of what you say is quite pragmatic, and even though I might disagree with it -- I understand your points.  However, whenever the EU or EMZ gets involved, you go full retard and start droning on about "solidarity" and thus begin to be generous with my tax money, in favor of the PIIGS.  So I know you are quite educated on the topic, which leads me to a whole host of conclusions, but what I cannot figure out, is why.  You asked me why I hated the EU so much, and I gave you my answers.  So I ask you, why are you such a fan of it and the EMZ?  You see the numbers, and you accept it doesn't function as advertised, and when pressured on here about it, you divert back to the "solidary" nonsense.  Ask yourself, what goals do you hope the EU could accomplish that EU states couldn't do independently?  Then ask yourself, of those goals that the EU can accomplish that states cannot accomplish on their own, could these same goals be accomplished if you were to split the continent in half?  Could these same goals be accomplished with a smaller northern EU and southern EU, respectivly, while simultaneously alleviating the poverty that is gripping the south, and the theft of your and my tax dollars to support this Collasis.     

Tue, 05/20/2014 - 12:41 | 4777880 Ghordius
Ghordius's picture

"...start droning on about "solidarity" and thus begin to be generous with my tax money, in favor of the PIIGS..." did I? where? on ZH?

I seldom comment on the EU except correcting some myths, and it's even more seldom that I find on ZH people seriously commenting on monetary matters

on the EU: note that our darling cousins the Americans and Britons are still "metal on the pedal" with Globalization 2.0. for me, the common market is a reaction to that

on the EZ: why don't we discuss this on a seriously well written article on the EUR? this one, for example:

I thought you were taxed in EUR, not USDs

Tue, 05/20/2014 - 09:47 | 4777173 NoDebt
NoDebt's picture

Funny how S European bonds started tanking just a relative handfull of days ago.  And now this.

"Priced in"  (if you had the data in this story a week or two ago, which undoubtedly certain people did).

Tue, 05/20/2014 - 09:36 | 4777110 LawsofPhysics
LawsofPhysics's picture

What timing.  Let me say it again.  Owe a bank $100 and it's your problem, owe them a few trillion and it's their problem.

Tue, 05/20/2014 - 09:37 | 4777113 orangegeek
orangegeek's picture

so the plan is to prop markets up while the "cleansing" occurs - fair enough.


many thanks to all the banksters making this happen at a global level.


btw, nice volume yesterday - how's that working for you banksters???

Tue, 05/20/2014 - 09:39 | 4777126 JenkinsLane
JenkinsLane's picture

Fuck the Euro and fuck the EU.


Tue, 05/20/2014 - 09:40 | 4777128 firstdivision
firstdivision's picture

LOL  still about 100% below where the yield should be.

Tue, 05/20/2014 - 09:41 | 4777130 AccreditedEYE
AccreditedEYE's picture

It's ok, it's OK... financial MSM keeps yelling at the top of their lungs that "we need to look out because may have a 20% correction". This means we can never have one. That is all.

Tue, 05/20/2014 - 09:41 | 4777132 Cognitive Dissonance
Cognitive Dissonance's picture

Well that certainly explains the near record low yields on Italian sovereign paper.


Tue, 05/20/2014 - 09:41 | 4777134 blueEyedDevil
blueEyedDevil's picture

Time to bring out the Bunga Bunga girls to make the nation feel good -- oops that got rid of that guy.

Tue, 05/20/2014 - 09:42 | 4777135 nuclearsquid
nuclearsquid's picture

Wow!  Anything growing at 26% YOY is a clear buy signal.


Tue, 05/20/2014 - 09:50 | 4777188 youngman
youngman's picture

If it lasts longer than 4 hours you are supposed to call your doctor

Tue, 05/20/2014 - 09:41 | 4777136 Bill of Rights
Bill of Rights's picture

$250K fine for lying on health insurance forms - The Washington Post

The Obama administration Friday spelled out civil fines of up to $250,000 for knowingly and willfully providing false information to get taxpayer-subsidized coverage under the new health care law.

**New regulations say the fines also apply for lying to escape the law’s requirement that most Americans carry health insurance**

If you fail to provide correct information — but there’s no malicious intent— you still risk a $25,000 fine. It can be waived if there’s a reasonable explanation and you acted in good faith.

GO TEAM! New regulations say the fines also apply for lying to escape the law’s requirement that most Americans carry health insurance:

So much for the Religious excuse lol...Stalin would be proud of his mentor.

Tue, 05/20/2014 - 09:44 | 4777152 youngman
youngman's picture

If you are a pay..if you are a get away with it..the new playing field

Tue, 05/20/2014 - 09:42 | 4777142 youngman
youngman's picture

Thats a pretty big and fast jump...wonder what happened..Berscoloni not paying anymore now that he is in seems like the sheeple have decided not to pay anymore..but hey...their bonds are doing well....more or less

Tue, 05/20/2014 - 10:20 | 4777343 Telemakhos
Telemakhos's picture

Berlusconi is not in jail, supposedly because he's too old to be incarcerated without it posing a risk to his health.  Instead, he's doing community service in a home for Alzheimer's patients, when he's not busy promising the Italian people that his party, if elected again, will abolish taxes on pet care products and liberate 150,000 dogs from state-run pounds.  It seems that his 28-year-old girlfriend likes dogs.

He's also promising a pension for housewives and some other handouts to the otherwise underbribed voters.  He still has some very vocal supporters, who claim that he was ousted by a US- and/or German-led coup, and that he's the rightful ruler of the Italian people, since he was the last democratically elected Prime Minister.  

Tue, 05/20/2014 - 11:13 | 4777562 tommylicious
tommylicious's picture

meanwhile i can't even get a date for coffee.

Tue, 05/20/2014 - 11:56 | 4777732 Telemakhos
Telemakhos's picture

You're not worth nine billion dollars, nor have you led a nation (albeit into bankruptcy).  Women like those kinds of things.

Tue, 05/20/2014 - 12:32 | 4777856 Ghordius
Ghordius's picture

Berlusconi is also very charming, particularly with the ladies. Women also like those sort of things

Tue, 05/20/2014 - 13:54 | 4778129 Telemakhos
Telemakhos's picture

He's also seventy seven years old.  At the point when a 77 year old picks up a 28 year old, it's not about the charming personality anymore.

Tue, 05/20/2014 - 09:59 | 4777234 withglee
withglee's picture

With a properly managed Medium of Exchange, DEFAULTs are met with immediate INTEREST collections of equal amount. The relation is: INFLATION = DEFAULT - INTEREST. The objective is zero INFLATION.

When INTEREST collections are held artifically low, two things happen: 1) INFLATION occurs; and 2) the automatic negative feedback mechanism is disrupted ... bad loans are made ... and DEFAULTs ratchet higher.

You don't mess with mother nature.

Tue, 05/20/2014 - 09:59 | 4777238 NoWayJose
NoWayJose's picture

Having trained their people that you can get a check without working ( as long as the Germans work), it was inevitable that the people would learn that you don't have to pay back loans either! Of course, the banks have found this out too - hence the reluctance to issue loans to ripple who are being conditioned to not pay them back.

Tue, 05/20/2014 - 10:09 | 4777290 ebworthen
ebworthen's picture

Those banks need to get busy making more bad loans so there can be another crisis and they can get bailed out again.

Tue, 05/20/2014 - 10:52 | 4777483 NEOSERF
NEOSERF's picture

Looks like the "it can be free" meme from the US and France is resonating everywhere.  Why pay the banks for a place to live when they won't evict you anyway?  Force the numbers down so your government has to start printing double time to keep the collapse out of the glare of cameras.  No reason to try when the government pays you not to.

Tue, 05/20/2014 - 11:03 | 4777522 Bahamas
Bahamas's picture

Not much to laugh about. The suicide tendency in Italy is growing accordingly. Poor Italians, such a talented people that have invented so much for the rest of the world and now the banksters, not only are looting it all, but taking their very lives with it. Vampires! .

Tue, 05/20/2014 - 15:46 | 4778570 Remnant_Army
Remnant_Army's picture

Tuesday, April 26th, 2011

"Italy will be instrumental in the fallout which will trigger the involvement of global powers in a war – all these events are inevitable, but prayer can ease suffering. Pray, My daughter, that people will turn to Me and ask Me for help and guidance through these times of turmoil."

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