Since the yes vote by the U.K to leave the European Union, there has been little talk of the problems faced by Greece and other countries that seemed to dominate the financial news cycles over the past couple of years. Instead the troubles seem to be coming from Italy’s banks that are facing a crisis in the making.
It seems that Italy’s banks are facing a serious situation with non-performing loans that total a staggering 300 billion euros. The officials in the top banks and institutions have been trying to unload these non-performing loans for many months now and have apparently had very little success. Top Italian officials have asked the European Union to help them sort out the mess and have been met with deaf ears from the rest of the union. Germany and Brussels have both stated openly that they see no reason for the public to have to bail out the Italian banks and have said that Italy needs to figure out a solution by itself.
Fears that the crisis could spark a meltdown of the entire European union have been met with disdain with Bavaria’s finance minister stating that the current regulations need to be adhered to and there is no need to break the rules again as was done to stabilize the E.U when Greece was suffering from financial woes of its own.
The opponents to a bailout say that this situation is a clear reason why there should not be European deposit insurance that would allow for German or other national banks to liable for debt incurred by other less prosperous E.U states. State aids to banks in the European Union is permitted under E.U rules only in the event of “serious disturbance” which many believe that this is, and just as many believe not only that it is not, but believe that the Italians should be made to clean up their own mess.
Whether or not this will become a crisis that will affect not only the other European Union nations but will spread to other countries across the pond has yet to be seen. What has been seen however are the cracks beginning in the façade of the E.U. Actually, the cracks appeared long before this episode but have been ever widening in the past few years with first Greece then “Brexit” and now Italy facing serious issues that the rest of the nations would like to either ignore or wish away. Has the European “union” become that in name alone??
