In Italy, Too, Money-printing Feeds Recession, Lending Collapses
February 20, 2013 • 11:20AM

A report by Italy's banking association ABI on Feb. 19, showed that, while the ECB is printing 1.4 trillion euros since late 2011, and the Bank of Italy is bailing out failing MPS bank, bank lending to the Italian economy is collapsing. Loans to families and companies dropped by record amounts in January, and the contraction of the economy reached a 1% annual rate in the fourth quarter of 2012. (Every economy in Europe is now in recession, with the sole exception of Estonia.)

According to ABI the value of total loans issued, 1.467 trillion euros, represented a 2.5% drop from the December value and a drop of 16% from the year-earlier level. But the ABI reported that bank deposits continued to increase by 6-7% a month in January, reaching 1.2 trillion euros.