Markets start the year strong while Italy totters towards the next crisis

The headline business story of the holiday season was the latest bailout of Banca Monte dei Paschi di Siena. This is Italy’s third largest bank and, according to recent ECB ‘stress tests’, Europe’s weakest — regarded by pessimists both as a potential catalyst for systemic collapse and a symptom of deeper Italian problems that could kick off another euro crisis this year.

Monte dei Paschi is also of special interest to me as the world’s oldest bank, having been founded by the magistrates of Siena in 1472 to provide loans at non–usurious rates to ‘poor or miserable or needy persons’, underpinned by wealth from local agriculture. Though it evolved more conventionally over the centuries, it remained sufficiently rooted in its territory and purpose to win praise, in the 1930s, from the exiled American anti-capitalist Ezra Pound — who called it a ‘damn good bank’, in contrast to the Bank of England, which he regarded as ‘a gang of usurers’ under the allegedly evil governorship of Montagu Norman.