U.S. bank closings tonight are unlikely with a winter storm having already closed Washington, D.C. and expected to close all of the coastal Northeast by morning, with blizzard conditions over parts of the region.
Stocks of Italian banks are down sharply this year with concerns that parts of the bailout plan are illegal under EU law. Another concern is deposit flight and the expiration of €75 billion in small bonds sold to savers. There are worries that such bonds might be treated like deposits in the event of a bank failure, with the government essentially canceling the bonds, even though EU law would not seem to permit this approach. Italy is also losing some deposits stashed there from Greece as that country’s banks now look more stable than those of its neighbor to the west. With deplorable loan portfolios and all these other reasons to worry, bank stocks are down about one fourth since the start of the year, and Monte dei Paschi falling by more than half. Government officials and bank executives insist the banks are financially sound.
Bitcoin is now subject to so much network congestion and internal turmoil that senior developers are giving up on the digital currency. The currency’s de facto board of directors has not been able to agree on fixes, and the bitcoin mining cartel has resisted any changes at all. The irony of this situation is that fewer than 10 key people effectively control bitcoin, which was originally meant to be decentralized. The result of the congestion and other technical problems is that routine transactions can be delayed by more than a day. Delays will only grow as more transactions take place. The value of bitcoin has fallen by half from its peak of 2014, many merchants that experimented with it no longer accept it for payments because of the delays, and surveys suggest that the number of active bitcoin users has fallen by more than half. As with anything based on software, there is a risk of sudden catastrophic failure in Bitcoin. Absent that, it will not go away anytime soon, but it may disappear from the public eye and from popular culture as it evolves into a niche payment device, and there is a risk that its value could continue to decline.
The big surprise in bank earnings is a tentative €7 billion loss at Deutsche Bank. Plans to shut down most of the bank’s operations to cut costs and improve focus have cut into revenue sooner than expected, while most of the actual operational cuts have yet to take place. The stock is down by one fourth since the beginning of the year.