So Who Gets to Pay for Italy’s Banking Crisis?

The answers are beginning to take shape.

“There is not and there will not be a banking crisis in Italy, nor will there be a European financial crisis coming from Italy.” Those were the emphatic words of EU Economics Commissioner Pierre Moscovici over the weekend. “We have the capacity to deal with the situation and it will be dealt with from both Italy and at the European level” he told France Info radio.

Clearly, quixotic delusions are as rampant as ever at the loftiest heights of Brussels’ ivory towers. Either that, or things are now so serious that lying is the only tactic left available to their occupants.

The markets also appear to be in a state of eerie complacence. Since rumors of yet another publicly funded bailout emerged early last week, bank shares have taken off, not only in Italy but across most European markets. Shares of Unicredit, Italy’s only “systemically important financial institution,” has surged 20%, while Italy’s second largest bank, Intesa Sanpaolo, is up 10%.

Once again, just the slightest hint of future government and/or central bank intervention is enough to steady the nerves of today’s welfare-addled investors. For now

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