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Comment by davidw | Hacker News Reader

You're saying that cover is insulting to clowns?

Having lived most of the past 15 years in Italy, I think a lot of the criticism is justified.

What do you think the likelihood is of a run on Italian banks? I'm curious if you're average Italian citizen is aware of what a supposed bail in would subject depositors to (anything above a certain euro amount would be wiped out, such that occurred in Cyprus as one of the links in this thread notes).

The limit is 100k Euro. There is a fund to save deposits under 100k if a bank collapses. The problem is that there is no enough money to save every single depositor under 100k if enough banks are in trouble. That in Italy and everywhere else.

That limit either was, or was very close to being, ignored in Cyprus. You'd be foolish to bet €100k on that limit being hard if the shit hits the fan in Italy (which is a lot bigger than Cyprus and doesn't have anywhere near as much dirty Russian money they can grab instead). Also, the limit is for nought if Italy leaves the Eurozone and your savings are forcefully converted to "New Lira" (which are then "protected", but worth a lot less).

TL;DR: If you have cash in Italian banks, GTFOASAP. If you're a "good guy", buy hard Italian assets (perhaps property), so the money (perhaps) stays in the country, otherwise, get an offshore account (even if declared, and thus perfectly legal, it's much less likely that the Italian government will be successful in grabbing the money, especially if you pick a non-EU jurisdiction, but IANAL).

> If you have cash in Italian banks, GTFOASAP

That makes no sense at all. Just don't keep cash and invest everything except for a small contingency fund.

That's my point exactly. Sorry if it wasn't clear.

Excuse my really basic understanding of Economics, but how "investing everything" does keep you away from losing money to the bank in which your funds are? Aren't, the money you invest, already in a bank, and associated to your fund? If the bank fails how can you manage your investments (as I suppose you will lose your bank account if the bank fails)

Putting cash in a bank account is actually you lending money to the bank (for them to lend to other people), not a neutral store of an asset, like if you put physical bills or gold or whatever in a safe. If the bank goes bankrupt, that mean it's creditors (you) don't get paid, or get paid less than they're owed. To prop up trust in the banking system, governments insure bank deposits, in the Eurozone up to a value of €100k.

If you invest instead, you own (a piece of) something physical - a business or a property, typically. A house can burn down and the business can go bankrupt, in which case you lose your investment (unless you're insured). Banks in Italy are incredibly unhealthy at the moment, so to protect your money, you would want to put it in something more healthy, which might simply be a bank account in a not-Italian bank, or as proposed, assets of healthy businesses.

Reneging on an insurance guarantee or forcefully converting deposits to a different currency is a substantially different legal beast than confiscating property (which your shares would be). Perhaps, given that they serve roughly the same end, that shouldn't be the case, but it is.

Thank you for the quick anwser. I understood your answer to my first point, but, if you know, can you clarify the answer to my second question? If the bank fails, and my account in the bank, where I manage my investments, gets deleted.. where all my investments goes to? How can I manage them?

They don't "get deleted". When a bank manages your stock holdings, it's actually a different part of the business from the bank that you deposit cash into. All they do is hold in their computer systems (for a fee) the document that certifies that you own a piece of stock in company X. Just like you don't lose your stored stuff if a self storage business goes bankrupt (they or their creditors never have a claim on the stuff, the stuff is unequivocally yours), you don't lose your stock certificates if the bank goes bankrupt.

Thanks for clarification.

the real issue here is the central bank authority which should do the supervision on private banks. a significant number of italian banks right now are under a commissioner from the central bank for being near death in the past decade after the subprime crisis.

that's a serious thing: the whole cda gets thrown out and replaced by cronies from the central bank. now it's surfacing that these cronies, who should have done nothing but supervise, have no idea of how deep the bank they're directly supervising rabbit hole is. (the central bank supervises all others indirectly at least)

but this is kept under wrap for now from the general public. it's very easy to keep these thing from people minds as everyone just want to look elsewhere when faced with a problem larger than their close group of friend.

and that's making matter worse. a new kind of financial crisis is brewing here.

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