If earlier the experts were worried about the debt of peripheral Eurozone countries, but now, as stated by the American political scientist George Friedman, Europe was faced with a much more serious problem: the German economy.
And the source of the problem for Germany and Europe as a whole is the Italian banking system.
“Problems of banks in Italy could affect the banking system of the Netherlands and Germany, which now seems to becoming the newest member of the PIIG countries. The country is entirely dependent on the export of, its markets depleted,” notes Friedman.
The economy of the PIIGS — Portugal, Italy, Ireland, Greece and Spain — were the Central issue of the European debt crisis of 2011 and 2012 And when the crisis seemingly passed and Europe’s economy has begun to stabilize, Germany came out of this situation a winner. Its economy was strong, unemployment fell to 4.5%. The trade surplus of Germany, as a weaker Euro increased sharply and reached a record value in June 2015 — $23.9 billion
However, the Italian banking system can now pull them down and the German banking system is the strongest economy in the Eurozone.
From the data published at the end of 2015, it becomes clear that the amount of non-performing loans in Italian banks is 300 billion euros. This is 17.3% of the total loans granted. This is the total number, given that the average in the Euro area is 6.8%, and in Germany by only 2.3%.
Friedman believes that a lot, since Italy is the fourth largest economy in Europe and the eighth largest economy in the world. The largest banking system in Eastern Europe, Italy strongly correlated with other Eurozone economies, as, for example, the same Germany, to be precise, with Deutsche Bank — the largest Bank in the country. Friedman believes that Germany will be able to save Italy, although it will cost quite a large sum.
“It’s not the PIIGS. The fall of the German economy has not even begun. When it starts, that’s when we will witness real panic,” summarizes Freedman.
