Economic expert Martin Armstrong has warned that reports coming out of Italy suggest that ATM machines are being emptied, as a run on banks begins.
— The Economist (@TheEconomist) July 11, 2016
Italy’s ongoing attempts to bend Europe’s bail-in rules and revert to the “older” bailout protocol continue to run into problems. The latest confirmation came from Eurogroup head Jeroen Dijsselbloem who earlier today said he was not “particularly” worried about Italian banks. More interesting was his insistence that “there have always been and will always be bankers that say ’we need more public money to recapitalize our banks…. and I will resist that very strongly because it is, again and again, hitting on the taxpayer.” He then added that “the problems with the banks need to be sorted out in the banks and by banks.”
He sided further with the Merkel camp when he said that he finds the ease in which bankers ask for public funds to sort out problems is “very problematic.”
Dijsselbloem added that “there has to come an end to” bankers asking politicians to solve their problems.
His statement comes just a day after David Folkerts-Landau, the chief economist of Deutsche Bank, called for a €150 billion bailout for European banks, confirming that it is no longer just an “Italian” issue.
Dijsselbloem’s further comments showed that he won’t be easily swayed absent a market-wide panic and/or a steep slump in the economy.
“I think they’re talking constructively to try and find solutions within the European frameworks,” says Dijsselbloem before a meeting in Brussels Monday cited by Bloomberg. “Yes, there are issues of non-performing loans in the Italian banks, but that’s not a new issue. It needs to be dealt with. It will have to be dealt with gradually. There will be no big solutions.”
“It’s not an acute crisis. That also gives us some time to sort these things out. So as long as the authorities in Italy and the banking authorities are constructively talking, I think we should allow them the time to do that”
BRRD rules are “clear. They are, of course, also strict in the sense that they make very clear when there needs to be a bail-in and who needs to be bailed-in in what order. And within that framework a solution still can be found. I mean, you still have to deal with banks sometimes. And it’s still possible. But it has to be done within those rules.”
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