Italy's Downward Spiral Accelerates


#333

euronews.com/2018/03/13/ital … parliament

Strands of Syriza by the sound of it.

I thought non-EU immigration was each individual member state responsibility?


#334

Did you not read the fine print where Merkel can make a decision and every other state has to obey ?


#335

Serious constitutional issues in Italy, with a potential snap election.
President objects to a eurosceptic government being created, against the wishes of the people.
Euro woes to continue


#336

Italians can have any government they want, except a Eurosceptic one.


#337

Well the great benevolent one in New York has his plan anyway.
Turns out the problem isn’t too much debt across Europe. Predictably enough, it’s not enough debt.

cnbc.com/2018/05/29/billionaire-soros-outlines-plan-to-save-europe.html


#338

Some US audio from thestreet.com. Among other interesting insights (at least for economic illiterates like me) is that about 60% of Italy’s USD$3tn debt is owned by foreign creditors. That’s why bank stocks were being pummeled today, including on the DOW.


#339

ASX got hit downunder today too


#340

Its actually far worse than that given where the debt is stashed away. Most of the Italian sovereign debt seems to be either rated as zero risk rated / as good as cash in many banks Tier capital or else recycled in some form or other by various ECB market operations. So just a rerun of 2008 in many ways with the ECB taking the role of the rating agencies.

Brussels/Berlin/ECB were able to oust the Italian government during the last crises in 2012 but this time around its going to be different. For a start the Germans have just flatly turned down Macrons plans for reforming the Euro. And given the Germans utterly uncompromising attitude which can be summarized as we’ve got our 250B trade surplus due to a discounted exchange rate so screw everyone else the German have no real allies by this stage. apart from the economic vassals. So no unified front to stare down the Italians this time. The internal political scene in Germany at the moment is utterly bizarre. At best it could be described as a strange brew of ordoliberal isolationism run amok to straight out 2’nd Empire prussian predatory economic triumphalism.

The anger against the euro in Italy is widespread and deep and the general assumption now is not longer if but when. The only thing deferring the final breakup is the inevitable massive financial dislocation that will follow. But its France that is the one to watch. Given the brutally clear reasoning of the top people in Bercy, the french finance ministry, I’d expect them to be planning a post euro future and how to deal with it to Frances advantage. Due to how complete the German rebuff was to the French plan, and it was a very reasonable and pragmatic plan, and how closed minded the Germans were against the slightest meaningful reforms I’d expect to start hearing broad hints in the French press soon about “steps being planned” to defend the integrity of the republic if the situation so demands it. The French will have their financial barricades ready to deploy and the will to use them when the breakup happens.

I think the can that was kicked down the road in 2012 has just hit a brick wall. It will be interesting to see if they can lob it over the wall again like they did in 2012. To gain more time. Or if recent events will prove to be a wall too far.


#341

The Greeks blinked in worse circumstances.


#342

25% of those 60% (so 15% of total) are held by the ECB (assuming the ECB counts as a foreign creditor).

That’s 341 billion euros.

reuters.com/article/us-ital … SKCN1IJ15Z


#343

I wonder if the Central Banks will cut or hold base interest rates in the near future given Brexit and the Italian and Spanish issues?


#344

Its not proposing to increase interest rates in 2018
Its more a question if they reduce bond buying


#345

Missed this last week: Italy toying with issuing parallel currency.

Populists still trying to put a government together rather than go for a new election. Presumably they would propose another Finance Minister but keep this parallel currency plan.

They look like an unwieldy coalition but they can’t be accused of not having a mandate.


#346

Parallel currency? Let me guess, savings in euros, debts in Lira. Sound like another version of have panettone and eat it too.


#347

Some US audio from thestreet.com. Among other interesting insights (at least for economic illiterates like me) is that about 60% of Italy’s USD$3tn debt is owned by foreign creditors. That’s why bank stocks were being pummeled today, including on the DOW.

it’s the other way around. 60% of Italy’d debt is held internally.

focus-economics.com/country … ublic-debt

Around 60% of Italy’s public debt is held by resident holders. Italian financial institutions—including in particular banks and insurance companies—hold a sizable part (around 75%) of the total debt held by residents. The role of domestic banks and financial institutions became prominent during the Euro debt crisis between 2010 and 2012. Many foreign investors fled from Italian debt markets as uncertainty about the sustainability of the country’s finances mounted. At the same time, Italian lenders invested the proceeds of cheap long-term ECB loans in high-yield government bonds, thus propping up their profits that had been hit by years of recession.

Italian saver will be slow to vote themselves out of the euro. It would decimate their savings.
Another link

reuters.com/article/italy-d … SI6N14V006


#348

Are they still the majority ? the majority of voters maybe, or maybe not


#349

The whole problem with the narrative of Italy leaving the Euro is that not liking the EU, isn’t any measure of opposition to the Euro. Greece is in a far worse position than Italy with even more dislike of the EU, yet they have made every effort to retain the Euro. If things do disintegrate in Italy and push comes to shove, I think the Italians will opt for a Greece-type internal devaluation rather than leave the Euro.

https://www.ft.com/__origami/service/image/v2/images/raw/http%3A%2F%2Fcom.ft.imagepublish.upp-prod-eu.s3.amazonaws.com%2F3db7d648-631c-11e8-90c2-9563a0613e56?source=next&fit=scale-down&quality=highest&width=700


#350

#351

Salvini blaming the EU for the collapse of a privately owned bridge…

5 Star opposed the Genoa bridge bypass, called reports of the imminent collapse a fairytale

m.dagospia.com/ad-aprile-sul-blo … nda-180932


#352

Unlike Ireland, which finances its debt with long term bonds (around 8 or 10 years is the new normal for Ireland), Italy is firmly in 2 year rollover land.

Italian 2 year has gone from negative rates to a current 1.3% in the last year. There is a big difference between less than fuck all interest and 1.3% when you have a debt pile as large as Italy. 130% of GDP. :frowning: