Cramer: Why Does No One Care About Banca Monte Paschi?
Twenty years before Christopher Columbus sailed the ocean blue, the oldest surviving bank in the world, Banca Monte Dei Paschi (BMPS), was founded in the Italian city-state of Siena. If you ever go to Siena, it’s one of the standouts on the tour of one of the great towns in the world, with a headquarters befitting its more than 500-year-old history.
But Monte Paschi, as people call it, is now broke.
We may discover this weekend that it has to be bailed out, as there seems to be no plan right now to save it in its current form.
When a bank goes bust in Italy, everyone connected with it gets hurt. Common Stock holders get totally wiped out, subordinated debtors can be, too. Finally, depositors can take a hit as there is insurance to 100,000 euros, but after that you are on your own.
This is not a small bank. It has $48 billion in public debt that could take a monstrous hit. This one could force Italy to take action: Can they really let the oldest bank in the world fail? Italy has the third-largest bond market in the world. This is the third-largest bank in Italy. I just don’t think there is enough money currently in the till to get something done without a huge amount of pain in anything even remotely involved with this bank.
And yet no one seems to care.
There was a time when this was all we would be talking about. It would be the focal point of everything — other than the strong dollar hurting earnings, and the spike in interest rates.
In that sense, though, it is just one of three things that no one seems to care about.
Now, I would like to be as glib as the world in not caring, but I only really care about these kinds of events when they are unknown.
This one’s known.
Still, it’s a rather remarkable moment that it means so little to people.
Let’s see what happens over the weekend. Right now though, stay tuned.