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Tremonti Warns of Another Crash

Aug. 14, 2017 (EIRNS)—Former Italian Economy Minister Giulio Tremonti warned about a coming bust of the global financial bubble in an interview with Corriere della Sera (in Italian).

Tremonti has just come back from a series of conferences in the United States.

"Since 2007, the causes of the crisis are all still there," he says.

"The excess liquidity that caused the crisis ten years ago is today exponentially higher. Finance is undergoing a frightening genetic mutation. All the elements producing the famous bubbles are all there."

People are going on holiday in an atmosphere of relaxation, but, "a minimum of reflection on the current situation should take place." He continued,

"Facing the Bastille, Louis XVI asked whether there was a rebellion; they told him it is a revolution, but he kept thinking it was a revolt, and we know how that ended.

"Today’s central bankers remind me of the French generals looking self-confident and satisfied with the Maginot line, ignoring the political power of the combustion engine. From the Tulip crisis to the Louisiana crisis, history teaches us that bubbles and disorder emerge when reality is ignored or invented."

Will it end up like in 2009?

"It would be a miracle if there were no bubble. Churchill said that there had not been two world wars, but only one with a long armistice in the middle. So, in my view, we are threatened by a similar situation today."

On the bail-in:

"In 2008, the banking system in Germany, France, U.K., was bankrupt, and for that reason government bail-outs were instantaneous. Those governments were not smarter than we [in Italy] are; our banks were in trouble but were not bankrupt and were hit by the crisis years later. Interventions were conditioned by absurd rules on state aid. Bail-in is born against bankers’ moral hazard, but instead of prohibiting moral hazard, or imposing a speed limit, they powered the brakes with capital requirements and the insurance company was replaced. In case of damage, depositors pay instead of taxpayers."

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