Thomas Fazi is a writer, activist and award-winning filmmaker. He has also translated into Italian the works of authors such as Christopher Hitchens, George Soros and Robert Reich.

Italy is once again in the spotlight. As its banking system undergoes a slow-motion implosion – the country’s banks are weighed down by €360 billion of bad loans, of which €200bn are deemed insolvent – all eyes are now on the Renzi government. How did we get to this point? Though there have been some attempts in recent years at reforming the banking system, and at addressing the banks’ heavy share of bad debt, the policy pattern has been more or less the following: whenever the market stress on individual banks (or a set of banks) reached critical levels, the government would roll out a last-minute quick fix that would temporarily appease market tensions but would do very little to address the underlying cause of the banking sector’s systemic stress: the unprecedented collapse that the Italian economy has suffered over the past 5-6 years.

We should be very clear about this. Much has been said in recent months about the mismanagement of Italian banks: the rampant corruption, fraud, and abuse; the widespread practice of distributing loans to friends and family; the unsavoury ties to politics, etc. There is some truth to this. But it is not the chief cause of the Italian banking crisis, as many commentators have asserted or implied. The crisis is ‘the consequence of the longest and deepest recession in Italy’s history’, as the governor of the Italian central bank, Ignazio Visco, recently stated. As financial journalist Matthew Lynn writes: ‘Italy doesn’t have a banking crisis; it has a euro crisis’.  ...

http://uk.businessinsider.com/italy-is-imploding-in-slow-motion-and...