If This Happens, Italy’s Banking System Becomes “Insolvent”…”Europe is screwed. You guys are still screwed.”
By Justin Spittler
TheDailyCoin.org
December 3, 2016
If This Happens, Italy’s Banking System Becomes “Insolvent” by Justin Spittler
Europe is “screwed.”
That’s what Steve Eisman thinks, at least. If the name rings a bell, it’s because Eisman was one of the few major investors who saw the last housing crisis coming.
He famously made a huge bet against the U.S. housing market. When housing prices tanked, Eisman pocketed more than $1 billion. The actor Steve Carrell played Eisman in the Oscar-winning film The Big Short.
A few weeks ago, Eisman hinted at his new big short: Italian banks. Reuters reported yesterday:
“Nobody is going to invest in the Italian banks unless they trust their balance sheets,” said Eisman, adding that Italian lenders have been “very slow” to recapitalize and sell off troubled assets.
“In the Italian system, the banks say (assets) are worth 45-50 cents in the dollar. But the bid price is 20 cents. If they were to mark them down, they would be insolvent.”
In other words, Eisman thinks Italy’s banking system is a ticking time bomb. And it’s only a matter of time before the “market” realizes this. He told the British newspaper The Guardian:
Europe is screwed. You guys are still screwed.
• Eisman isn’t the only one betting against Italian banks, either…
Reuters reported:
Data from the Italian market regulator shows “significant short positions” in Banco [sic] Popolare Di Milano and Banca Carige, while the regulator has restricted short-selling in shares of floundering Monte dei Paschi since July…
There is also evidence that investors have taken short positions in Italian government debt on a scale not seen since the euro zone debt crisis of 2011/2012.
• Bill Gross is worried about Italy’s banking system, too…
Gross is one of the world’s most respected investors. He founded PIMCO, one of the world’s biggest money managers, and now runs Janus Capital. You may also know Gross by his nickname, “The Bond King.”
This morning, Gross told Bloomberg that Italy is becoming a “basket case” due to its troubled banks.
• In short, Italy is teetering on the edge of a cliff…
The Rest…HERE
