Prolonging the Pain, Postponing the Inevitable: The EU Just Gave Its Crumbling Banks Two Extra Life Lines

Merely postponing the inevitable.

Rigged Game

Despite the trillions of euros thrown at Europe’s banks since 2008, in the form of direct government bailouts, government guarantees, asset buying programs, toxic loan purchases and the unending string of LTRO and TLTRO (virtually free loan) programs, the old continent’s rickety banking system is as fragile as ever.

The Euro Stoxx 600 bank index, which covers major European lenders, slumped 3.9% this week and is down over 25% since the beginning of this year. This is nothing new, merely the latest episode in a decade-long saga of decline and fall, as the following graph, courtesy of my WS colleague Wolf Richter, illustrates.

Things have gotten so bad that the EU is now even dialling back some of the timid banking regulations it passed in recent years, which were meant to present at least the pretence that the situation is under some degree of control.

Last week, hundreds of small…

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