Mark Carny on Italian bank collapse

kabayiri

TrickyTree83 wrote: »

The nation states are well equipped, if you had differeing policies over regions which encouraged the distribution of business across the country rather than entrenched in one particular region it would go some way to addressing that. The idea behind that would likely be some kind of devolution to regions to manage their own tax take within nationally set boundaries for those regions. The UK government has done pretty well on matters of devolution, not great, more could be done I think. This idea flies in the face of the direction the EU are moving in with harmonised taxation across large swathes of people.

They may have done the best they can, but the referendum result does seem to point to a clear divide.

mwpt

TrickyTree83 wrote: »

There are none as far as I'm aware, but that was not the point I was making. What I was saying was that the Eurozone (which is 19 out of the 28 members I think) has taken a route which has prevented Italy from doing what they need to do in order to shore up their economy as we did in 2008.

Yes,you've said that but what I'm trying to get at is the details. What specific rules have they imposed on Italy that prevented them from shoring up their economy? What rules were imposed that prevented Italy from stress testing their banks and shoring up their capital ratios?

TrickyTree83

mwpt wrote: »

Yes,you've said that but what I'm trying to get at is the details. What specific rules have they imposed on Italy that prevented them from shoring up their economy? What rules were imposed that prevented Italy from stress testing their banks and shoring up their capital ratios?

It's a state bailout rule.

I'm not going to search for a link I'm sure you can do that but the general sense of the rule from what I can gather from the FT and Guardian is that the rule is there to say that investors in the bank should take the hit first and only then should the taxpayer get involved.

Now on the face of it that seems ok, but in Italy in particular lots of the general public have been sold banking investments, so the general populace in Italy is on the hook for about £200bn (at least I think that was the number from memory). In this situation the Italians will be hit twice, once on their investments and again in terms of the government borrowing and any austerity/tax changes that come about because of that.

mwpt

TrickyTree83 wrote: »

It's a state bailout rule.

I'm not going to search for a link I'm sure you can do that but the general sense of the rule from what I can gather from the FT and Guardian is that the rule is there to say that investors in the bank should take the hit first and only then should the taxpayer get involved.

Now on the face of it that seems ok, but in Italy in particular lots of the general public have been sold banking investments, so the general populace in Italy is on the hook for about £200bn (at least I think that was the number from memory). In this situation the Italians will be hit twice, once on their investments and again in terms of the government borrowing and any austerity/tax changes that come about because of that.

You're talking about different things. In this post you are talking specifically about bank bailouts which some people agree with, some don't. Conrad for example was just mentioning the amazing case of the recovering economy that is Iceland, apparently due to letting their banks fail. I accept that they have rules around bank bailouts.

But in your other posts you seem to be saying (though forgive me if I misinterpret) that the EU has somehow prevented Italy from shoring up their own economy and stress testing their own banks as we have been doing. I'm trying to establish how the EU have done that, by which method.

TrickyTree83

mwpt wrote: »

You're talking about different things. In this post you are talking specifically about bank bailouts which some people agree with, some don't. Conrad for example was just mentioning the amazing case of the recovering economy that is Iceland, apparently due to letting their banks fail. I accept that they have rules around bank bailouts.

But in your other posts you seem to be saying (though forgive me if I misinterpret) that the EU has somehow prevented Italy from shoring up their own economy and stress testing their own banks as we have been doing. I'm trying to establish how the EU have done that, by which method.

Well clearly they have failed to pass the stress tests as we have done in the UK.

And clearly they've been unable to shore up their own economy under current EU rules. They're going to need to break these rules in order to do so without significant cost to the average Italian who has invested in their banking system.

I don't think it has any particular bearing on Iceland except that them being out of the Eurozone allowed them to tailor their solution whereas the Eurozone appear to be locked in to a monolithic system that isn't responding to its members needs adequately.

mwpt

TrickyTree83 wrote: »

And clearly they've been unable to shore up their own economy under current EU rules.

We're going round in circles. What rules?

We've established that bank bailouts are regulated (even though I'm trusting you on this, I don't know specifics) but I'm interested in which rules prevented Italy from "shoring up their economy".

TrickyTree83

mwpt wrote: »

We're going round in circles. What rules?

We've established that bank bailouts are regulated (even though I'm trusting you on this, I don't know specifics) but I'm interested in which rules prevented Italy from "shoring up their economy".

http://ec.europa.eu/competition/state_aid/overview/index_en.html

https://next.ft.com/content/c753b5d0-474d-11e6-8d68-72e9211e86ab

http://www.bloomberg.com/view/articles/2016-07-05/the-eu-s-inflexible-bank-rules-risk-an-italian-brexit

Come on, stop asking me the same question to which you'll get the same answers. It's all in the links that you eventually made me get for you.

Thrugelmir

cells wrote: »

For all the negativity about the EU its nations are top of the league tables on wealth when you exclude the natural resource producing nations

Strip out Germany and which nations are left though. "The EU" is a generalisation that paints a very different picture to the reality on the ground.

Strip London out of the rest of the UK and the picture is likewise very different.

Quasar

Meanwhile, having just returned from a two week holiday in Italy, I can state that there is no panic over there and the banking situation has featured in the news but nowhere near as a major item. Italy has been written off so many times before without any catastrophe materialising, that now anything anyone says outside of it is not even reported. Ditto for France and a few others.

Besides, they are all keeping a close eye on the UK at the moment

globalds

Quasar wrote: »

, I can state that there is no panic over there and the banking situation has featured in the news but nowhere near as a major item.

I would have thought there would have been some complaints about potential losses on what were considered safe bank bonds sold to the public ?

Glad you had a nice holiday ...Next thing you will tell us you had sunshine as well

Seems that although we couldn't do anything in the football . The UK has won one thing off Italy.

Why the UK is now officially crazier than Italy