Steve Eis­man is wor­ried about Europe’s banks

The Economic Times - - Money -

Lon­don: Steve Eis­man, who made a for­tune by suc­cess­fully pre­dict­ing the 2007-2008 fi­nan­cial crash, says the global fi­nan­cial sys­tem is “safe.” Speak­ing in an in­ter­view with the Fi­nan­cial Times, how­ever, Eis­man said that he had con­cerns about the con­ti­nent and that de­spite in­creased sta­bil­ity in the sys­tem, not every bank was safe.

“Euro­pean au­thor­i­ties did not fol­low the lead of the US and al­low the banks to take the pain early,” Eis­man said. “This was a mis­take. The other hin­drance has been the aus­ter­ity poli­cies of gov­ern­ments, which has pro­longed the pain for the con­ti­nent.”

Th­ese is­sues, Eis­man told the FT, mean parts of Europe’s fi­nan­cial sys­tem re­main un­der­cap­i­talised.

Re­gard­less of the is­sues in Europe, Eis­man said, he re­gards the global fi­nan­cial sys­tem as “safe,” say­ing: “The world is a very dif­fer­ent place to what it was pre­cri­sis. For the first time in my work­ing life, which is more than 30 years, I would re­gard the fi­nan­cial sys­tem as safe.” Eis­man was fea­tured in Michael Lewis’ award-win­ning book “The Big Short” as one of the few peo­ple to cor­rectly pre­dict that the fi­nan­cial cri­sis of 2007 was com­ing. He made a for­tune when his firm Fron­tPoint Par tners bet against sub­prime mort­gages — as much as $1 bil­lion, The Guardian re­ported.

He was sub­se­quently played in the film adap­ta­tion of the book by Steve Carell — al­beit with his name changed to Mark Baum.

Hi­s­tonewith­re­gard­toEurope has mod­er­ated some­what since his most re­cent prom­i­nent in­ter­view with a Bri­tish pub­li­ca­tion, in which he said the con­ti­nent was “screwed.” Speak­ing wi t h T h e G u a r d i a n in Novem­ber, Eis­man cited the sur­feit of non­per­form­ing loans in the Ital­ian fi­nan­cial sys­tem as a cause for con­cern, say­ing: “Europe is screwed. You guys are still screwed.”

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