Italy’s New Government Approval Rating Plummets From 43% To 34% In Three Weeks, Protests Return ~ Zero Hedge
by Tyler Durden
It was less than a month ago that the new Italian government of the pseudo-technocrat Letta, of Bilderberg 2012 and Aspen Institute fame, was voted in by a majority of the PD and the PDL parties (the latter agreeing so Berlusconi would get an extension of his much needed political immunity from assorted prison sentences). It may not last too long. As Reuters reports, it took just 20 days for Letta’s approval rating to plunge by 25%, dropping from 43% at the start of the month to 34%, according to an SWG institute poll. It would appear the Italian people (unlike their Japanese peers who at least according to government-controlled media data could not be happier with PM Abe, supposedly because of the bubblelicious 50% rise in the Nikkei225 year to date, even though under 20% are actually invested in the stock market making one wonder just how credible polling, and all other data in Japan actually is) don’t have Mrs. Watanabe’s childish fascination wth soaring stock bubbles, sexy bonds, mini skirts and 2% inflation bras, and instead demand real economic results. Which also means the protests are once again back.
by Silvia Aloisi and Sara Rossi
‘Italian prosecutors called on Monday for a six-year jail sentence and a lifetime ban on holding public office for centre-right leader and former prime minister Silvio Berlusconi, who is charged with abuse of office and paying for sex with a minor.
The 76-year-old billionaire media tycoon and senator is accused of paying for sex with Karima El Mahroug, better known by her stage name “Ruby the Heartstealer”, when she was under 18, during the now notorious “bunga bunga” parties at his villa at Arcore near Milan in 2010.
However, prosecutors considered by far the more serious charge was that he abused the powers of his office during a separate incident by arranging for her to be released from police custody where she was being held on theft charges.
They requested five years imprisonment for that and a year for paying for sex with a minor. The verdict is expected on June 24. But no final verdict will be enforced in either case until the appeals process, which can last for years, is exhausted.’
‘Almost one in four young Italians were unemployed in March, central statistics office Istat said on Tuesday.
A total of 635,000 or 38.4 percent of 15-24-year-old were jobless, according to Istat’s seasonally adjusted provisional data.
Italy is mired in its most protracted worst recession in 20 years, and young people have been especially hard it by the lack of growth and jobs.’
‘Italian police have arrested four men suspected of belonging to an Islamist militant cell believed to be planning terror attacks in the US, Israel and Italy. Two other suspects have reportedly fled the country.
The men allegedly sought to train militants in order to send them for operations abroad and have been accused of conspiracy to commit international terrorism and inciting racial hatred.
Hosni Hachemi Ben Hassen, the Tunisian leader of the cell- once an Imam at a mosque in the southern Italian city of Andria- was arrested in Belgium. Two more Tunisians were arrested in the Sicilian province of Catania, while another was arrested in Milan.’
A day after Italy’s president was re-elected to an unprecedented second term, the leader of an anti-establishment movement says citizens’ patience with traditional parties is wearing thin.
Beppe Grillo, a comic who heads the Five Star Movement, has dismissed President Giorgio Napolitano’s re-election as a bid by doomed parties to hang onto power.
Grillo, whose party is the No. 3 bloc in Parliament, predicted in Rome on Sunday that traditional parties would “last a year.”
The mainstream blocs are still bickering over how to form the next government two months after inconclusive national elections. Napolitano was re-elected Saturday after Parliament’s mainstream parties couldn’t agree on a new personality. Napolitano could tap someone to try to form a governing coalition this week.
In a book published in early January, La Repubblica delle stragi impunite (The Republic of the Unpunished Massacres. The unpublished papers of the bloody events that have shaken our country), Italian Judge Ferdinando Imposimato places the blame on NATO for organizing the bloody attacks that ripped through Italy during the 1980’s.
Honorable Imposimato presided over several terrorism-related cases, including the kidnapping and ultimate assassination of President Aldo Moro and the attempted assassination of Pope John Paul II. He was a leading anti-Mafia and is currently honorary President of the Supreme Court of Italy. He was elected to the Chamber of Deputies (Parliament) under the label of the Democratic Party of the Left and subsequently to the Senate.
The book comprises, in particular, a 1967 document pointing to the involvement of the Bilderberg Group, a club that brings together the most influential people to defend the interests of NATO.
by Paul Joseph Watson
Honorary President of the Supreme Court of Italy and former Senior Investigative Judge Ferdinando Imposimato, the man who prosecuted the case involving the assassination attempt against Pope John Paul II, has sensationally accused the Bilderberg Group of being behind terrorist attacks in Europe.
In an interview with the ArticoloTre website, Imposimato, who was also involved in the case involving the kidnapping and murder of former Italian Prime Minister Aldo Moro, said that he “found a document that left me appalled” implicating the Bilderberg Group in conspiring with the far right organization Ordine Nuovo to commit terror attacks.
Speaking of unsolved murders in Italy and the document in his possession, Imposimato stated, “When it comes to slaughter it also speaks of the Bilderberg Group. I believe this document. I did some tests and I can say that behind the strategy of tension and the slaughters there is also the Bilderberg group, a sort of Big Brother is over, maneuvering, using terrorists and Masons. “
The “strategy of tension” refers to a policy under the auspices of Operation Gladio, a NATO cold war “stay behind” project that sought to create an expedient political climate in Europe by having its agents carry out terror attacks which were then blamed on both far left and far right political groups.
Gladio was designed to demonize political opposition and “force the public to turn to the state to ask for greater security,” according to the testimony of former Gladio agent Vincenzo Vinciguerra. In 2000, an Italian parliamentary investigation found that the 1980 Bologna train bombing, which killed 85 people, was carried out by “men inside Italian state institutions and … men linked to the structures of United States intelligence.”
“You had to attack civilians, the people, women, children, innocent people, unknown people far removed from any political game,” Vinciguerra explained in sworn testimony.
“The reason was quite simple. They were supposed to force these people, the Italian public, to turn to the state to ask for greater security. This is the political logic that lies behind all the massacres and the bombings which remain unpunished, because the state cannot convict itself or declare itself responsible for what happened,” he added.
Imposimato stated that he was given the document by a former Ordine Nuovo terrorist. Members of Ordine Nuovo (Italian for “New Order”) participated in numerous deadly terrorist attacks, including the 1969 Piazza Fontana bombing, the 1970 Rome-Messina train attack, the 1974 Piazza della Loggia bombing in Brescia, and the Italicus Express bombing in 1974.
The Bilderberg Group is an annual confab of around 120 of the most influential power brokers on the planet from the world of politics, business, banking, academia, media, and even royalty. The organization’s yearly meeting is held in a plush hotel resort in either Europe, Canada or America, but despite a plethora of heavy hitters in attendance, the mainstream media affords the event scant coverage, labeling it a mere talking shop despite former NATO Secretary-General and Bilderberg member Willy Claes’ 2010 admission that Bilderberg attendees are mandated to implement policy decisions that are formulated during the meeting.
There are innumerable other examples of how Bilderberg has influenced major global events ahead of time, picking Presidents and Prime Ministers on a regular basis with total contempt for the democratic process.
In 2009, Bilderberg chairman Étienne Davignon even bragged about how the Euro single currency was a brainchild of the Bilderberg Group.
Imposimato’s broadside against Bilderberg follows in the footsteps of his compatriot Alfonso Luigi Marra, a prominent lawyer who recently requested that the Public Prosecutor of Rome investigate the Bilderberg Group for criminal activity, questioning whether the elitist organization’s 2011 meeting in Switzerland led to the selection of Mario Monti as Prime Minister of Italy.
Labeling the group a “unique, illegal brotherhood” of elitists who consider themselves to be “above the law,” Marra pointed the finger at Bilderberg for engineering wars, economic collapses, and arming dictators, activities which, “constitute an obvious, blatant violation, to say the least, of the articles of the Criminal Code.”
The precise date and location of the 2013 Bilderberg meeting is yet to be confirmed, although speculation has centered around the confab taking place somewhere near London in early June.
At least 10 gangsters armed with Kalshnikov rifles held up two armoured security vans on a motorway outside Como and escaped with €10m (£8.5m) in gold and cash.
In what Italian media described as a “paramilitary action”, robbers blocked in the Gruppo Battistolli security vans by sealing off both ends of a stretch of the A9 highway between Saronno and Turate with two abandoned lorries. The A9 connects Milan to the Swiss city of Chiasso.
Armed with Kalashnikov rifles, gang members opened fire on the vans and the security escort fired back but the occupants of one vehicle were forced out on to the roadside by a smoke bomb.
Robbers broke open the vehicle with a shovel that was later found at the scene. Investigators also found at least 50 bullet casings although there were no injuries.
The gang set one of the blockade trucks on fire and threw nails across the road to slow down police as they drove off towards Switzerland in three cars.
A wave of corrosive political scandals at a time of economic woe is exacerbating the outrage of European citizens, who are channelling resentment into street protests or at the polls.
Italy, Spain and Greece have all been hit by fraud or graft cases allegedly involving the top brass. France joined the ranks of scandal-hit nations this week after its former budget minister was charged with tax fraud.
“Everything is coming together to reinforce populist theories — the theory that ‘they’re all rotten’,” said Eddy Fougier, a researcher at the Paris-based IRIS think tank, which analyses international issues.
In France, outrage over the budget minister scandal has yet to erupt into popular protests.
But in some countries of southern Europe, which for several years have been hit by austerity measures more severe than in France, fury has coiled into potent blowback.
by Will Hutton
There was a time when to live a life virtuously was well understood. It embraced personal integrity, commitment to a purpose that was higher than personal gain, a degree of selflessness and even modesty. Those at the top may have got there through ruthlessness and ambition, but they understood that to lead was to set an example and that involved demonstrating better qualities than simply looking after yourself.
No more. Perhaps the greatest calamity of the conservative counter-revolution has been the energy it invested in arguing that virtue, whatever its private importance, has no public value. The paradox, the new conservatives claim, is only through the pursuit of self-interest can the economy and society work best. Responsibilities to the commonweal are to be avoided.
The retreat of virtue has become the plague of our times. Greed is legitimate; to have riches however obtained, including outrageous bonuses or avoiding tax, is the only game in town. But across the west the consequences are becoming more obvious. Politics, business and finance have become blighted to the point that they are dysfunctional, with a now huge gap in trust between the elite and the people.
The drama playing itself out in France is a classic example. François Hollande was elected president of France less than 12 months ago, promising an “exemplary” administration after the sleaze of the Sarkozy years. Then came Jérôme Cahuzac. Until four weeks ago, he was the French socialist budget minister, leading the crusade against tax avoidance. It now transpires that he himself had hidden ¤600,000 in a secret Swiss account. He has resigned, but it has triggered not just a crisis for the French president, but for the entire French political class and political system.
Already two former presidents – Chirac and Sarkozy – have been mired in charges of embezzlement and illicit campaign financing respectively. But the Cahuzac affair goes further – with illegality intertwined with hypocrisy. Already beaten into third place by the National Front in a recent byelection, Hollande’s socialists now face the charge not just of incompetence and lack of political direction but of cheating and lying. Who understands the need for public virtue?
With the mainstream political right in disarray and no less compromised, the danger is that the major beneficiary will be France’s National Front, riding the disillusion not just with politicians but with the entire elite. There is one rule for them, it seems, and another for ordinary people who confront austerity, declining living standards and unemployment at a 16-year high.
The extreme right’s pitch is clear – France can no longer trust its leaders. It must assert its republican virtues against its own elite, foreigners, immigrants, Muslims and even the interference of Brussels. Vote National Front.
Meanwhile in Spain, the prime minister, Mariano Rajoy, was recently alleged to have hidden €250,000 from the tax authorities. Now King Carlos’s daughter, Cristina, faces trial over her role in her husband’s allegedly nefarious business affairs. In Italy, Beppe Grillo‘s anti-elite Five Star Movement won nearly 30% of the vote as a protest against a political class that is corrupt from top to bottom. Grillo at least is not a quasi-fascist. Less comforting is the prospect that if he fails to get the constitutional changes he calls for, the unstable forces he has unleashed could easily manifest themselves in a much uglier form.
In these countries, what is needed are credible, clean politicians with a credible programme to take on the super-rich, restore virtue to public life and relaunch their stagnating economies. But popular opinion knows the new rules of the world of tax havens, bankers’ bonuses and corporate self-interest along with the ideology that justifies them.
Today, the state is seen as ineffective and repressive. The rich have no compunction in hiding their wealth and avoiding tax because selfishness is legitimate, even indeed a moral obligation. Electorates doubt not just their politicians, but their capacity to do anything even if they were minded.
Britain is also captive to these trends. The MPs’ expenses scandal may not have exhibited hypocrisy and corruption on the Cahuzac or Italian scale, but it has similar roots. Lawyer Anthony Salz (a member of the Scott Trust that owns the Observer and Guardian), in his report into the culture at Barclays, inveighed against the ethical “vacuum” of the seriously overpaid 70 top bankers over the last decade. The promotion of their own interests trumped those of the bank or even basic ethics. Centrica, custodian of the near-monopoly British Gas, felt justified in creating a bonus pool of £15m for five executives running essentially a risk-free business. Senior police officers are jailed for accepting bribes from tabloid newspapers. Disproportionately of reward, preoccupation with one’s own interests and diminishing public virtue disfigure Britain, too, and into the trust gap marches populist Ukip.
We know the precepts of a fair society – a proportional relationship between reward and effort, helping each other when bad luck strikes and sharing the benefits of good luck. But this sort of society needs to be led by people who live by those virtues. Up until 50 years ago, belief in God underpinned our public morality: even if the elite behaved badly at least it knew it behaved badly. Today, we are living through the revolt of the elites as historian Christopher Lasch warned nearly 20 years ago. The moral code undergirded by Christianity and which supported fairness has been enfeebled by secularisation and the precepts of free market economics. Nor are there powerful labour movements, informed by a belief in the feasibility of socialism, to keep the elites honest.
Lasch’s view was that there was only one way forward – the reaffirmation of democracy. What we need is not the democracy of the one-off referendum. We need the deep democracy of transparency and accountability, along with constitutional mechanisms and processes that hold our private and public leaders to account day by day.
In this respect, Grillo in Italy may foretell a better future – the insistence that Italian politics is completely opened up has to be right. We are also learning more about who is doing what, thus Cahuzac’s fall. But this is only the first foundation of what is necessary to bridge the trust gap. We need even more openness, with the same principles extended to our businesses and banks. There needs to be a new understanding of the legitimacy of the public domain and public intervention. The time has come to hold our leaders – in the public and private sector alike – to account for their actions.
by Mark O’Byrne
Gold is higher in most currencies today except the Japanese yen. Gold surged over 3% to 0.149 million yen per ounce yesterday as markets shuddered due to the scale of currency debasement soon to be seen in Japan.
While the Nikkei has surged as expected, Japanese 10 year bonds sold off sharply with yields spiking from the all time record lows of 0.334% to over 0.6%.
The risks of a bond market crisis or currency crisis in Japan is something we have long warned of. The risk is now very high and hence strong demand for gold bullion in Japan with Reuters quoting sources in Japan who said that “the general public is buying.”
Billionaire investor George Soros and Bill Gross, who runs the world’s biggest bond fund, said the Bank of Japan’s currency debasement risks weakening the yen. Indeed, Soros has warned of a currency “avalance”.
“If the yen starts to fall, which it has done, and people in Japan realize that it’s liable to continue and want to put their money abroad, then the fall may become like an avalanche,” Soros said today in an interview on CNBC.
An interesting development in the precious metals market is the largest Dutch bank, ABN Amro, has said that they will no longer be providing physical delivery of precious metals including gold, silver, platinum, and palladium bullion coins and bars.
ABN AMRO, one of the largest banks in Europe announced in a letter to clients that it would no longer allow clients to take delivery of their metal and instead will pay account holders in a paper currency equivalent to the current spot value of the precious metal.
Thus, instead of legally owning a risk free, physical asset (a bullion bar or a bullion coin), the bank’s clients are now unsecured creditors and are now exposed to the bank and the financial system – somewhat defeating the purpose of owning precious metals.
The move highlights the importance of owning physical bullion either in your possession (be that be in a safe or vault in a house, in the attic, under the floorboards or elsewhere in your possession) or in a secure vault in a country that is stable and respects property rights.
Gold is again testing long term support at the $1,540/oz level and at the €1,200/oz and £1,000/oz levels.
While further weakness is possible and the short term trend remains down, current price levels will be seen as cheap in the coming years as fiat currencies continue to be devalued versus store of value gold.
Gold looks oversold and gold’s 14-day relative strength index has fallen to 28.4, below the level of 30 that indicates to some analysts who study technical charts that a rebound may be imminent.
Markets and many experts remain in complete denial about the ramifications of the EU, IMF, ECB deposit confiscation in Cyprus. The mantra is that Cyprus is different and unique. This is the same complacent and irresponsible mantra that was heard when the subprime crisis in the U.S. reared its ugly head and when Greece began to implode in 2009.
The CEO of Unicredit Federico Ghizzoni said yesterday that it is “acceptable to confiscate savings to save banks.” He said that the savings which are not guaranteed by any protection or insurance could be used in the future to contribute to the rescue of banks who fail and that uninsured deposits could be used in future bank failures provided global policy makers agree on a common approach.
He called for “a common solution in Europe” saying that the “EU should pass laws identical and shared in different member states”. Indeed he went a step further and called for a global coordination of deposit confiscations to rescue failing banks.
Including deposits “is acceptable if it becomes a European solution,” said Ghizzoni, 57.
“What we cannot accept is differentiation country by country inside the same area. I would strongly suggest to make this decision not only within Europe but within the Basel Committee, where all countries are represented.
Ghizzoni is also a Member of the Board of Directors of Institute of International Finance in Washington, Member of the International Monetary Conference in Washington and Member of the Institut International d’Etudes Bancaires in Brussels. He attended the powerful Bilderberg Group meeting in Spain in 2010 and he a frequent attendee at Davos.
It is important to realise that the Cypriot deposit confiscation was not a “haircut” rather this is a confiscation of people’s deposits – 60% of individual and companies hard earned cash saved in a bank.
Cyprus is not a tax haven or offshore. It is in the EU and the majority of the deposits were held by EU citizens – Cypriots, Greeks, British, German, Italian and citizens and companies of other nations.
Russian deposits made up just 8% of the total and of that only a tiny fraction was ‘Oligarch money’.
This is an attack on capitalism itself and something that one would expect in North Korea. It is a very dangerous precedent and what is more concerning is that there are policy papers calling for similar confiscation of deposits in the UK, Canada and New Zealand in future “banker bail outs” or “bail ins”.
We do not have a “crystal ball” however we are keen students of economic history and of the history of debt and financial crises. This clearly shows that sovereign nations, be they led by kings and queens or democratically elected governments usually resort to printing money and debasing the currency or expropriating assets.
Today, we have powerful supranational institutions who have little loyalty or affinity with ordinary people or businesses and whose primary aims seem to be to protect failing banks and a failing currency union.
The confiscation of deposits, especially deposits over the €100,000 level seems likely in other European countries and could be seen in indebted nations globally.
Individuals, families and companies need to diversify their assets and not have all their life savings and capital in banks.
Stacy Summary: This is the other tragic side of quantitative easing (only banksters need apply for free cash) and a financial system destroyed by fraud, cronyism and crime. You see similarly bleak job prospects from America where we see the worst participation rate since 1979 and where McDonald’s jobs are advertising for employees with college degrees. Welcome to the new world disorder. Be a slave, a jumper or a free gold, silver, bitcoin thinker.
An academic jumped off scaffolding to his death when he was only able to find a job in a call centre after finishing his doctorate, an inquest heard today.
Dr Philip Elliott, 31, who had recently completed a PhD in physics at Reading University, was seen on the sixth floor of an apartment block in west London just after 11am on January 27 this year.
Police tried to call him down but he fell from the property in Cromwell Street, Kensington, an hour later, the hearing was told.
And in Italy . . .
The bodies of Romeo Dionsi, 62, and Anna Sopranzi, 68, were discovered by their neighbours on Friday morning at their home in Civitanova, a small village in the central Marche region on the Adriatic Sea.
Learning the news, the woman’s brother Giuseppe Sopranzi, 73, threw himself into the sea. His body was retrieved by rescuers who were unable to revive him.
Police said there was no doubt the suicide was linked to economic problems, and that the couple was unable to pay their rent.
Italian border police found 12 gold bars worth a ton of money — either $7.5 million or $6 million, according to different news sources — hidden in a car on Easter Sunday during a routine check of a family vehicle.
According to swissinfo.ch, the car was driven by a 53-year-old Italian man who was a legal representative at a Swiss company. He was taking his wife and three children on Easter holiday.
Police decided to search the car when they noticed how nervous the family looked. The car examination uncovered a hidden compartment that stashed the 12 gold bars, which were wrapped in newspaper.
The man was unable to explain why possessed the bars or how he got them and his wife gave “evasive answers,” according swissinfo.ch. He was charged with money laundering and the gold and car was immediately seized.
The bars didn’t bear any engraving and their source is currently unknown, according to NBC. An investigation is currently in progress.
by Tyler Durden
It appears, given news from Italy today, that European depositors are increasingly coming to the realization that deposits in their local bank are not ‘safe’ places to put their spare cash, but are in fact loans to extremely leveraged businesses. In a somewhat wishy-washy, ‘hide-the-truth’-like statement on Monte dei Paschi’s website, the CEO admits to, “the withdrawal of several billion in deposits.” Of course, the reasons why these depositors withdrew their capital from the oldest bank in the world will never be known though of course he blames it on “reputational damage” from their derivative cheating scandal. Apparently the fact that this happened to come about six week after said scandal and the bank’s third bailout, and that the prior two bailouts did notresult in such an outflow of unsecured liabilities (at least not to the public’s knowledge), was lost on the senior management, as was lost that a far greater catalyst may have been the slightly more troubling events in Cyprus in the second half of March. Unsurprisingly, as Reuters notes, the CEO declined to give a forecast on the level of deposits at the end of the first quarter of 2013; no wonder given the bank just doubled its expectations for bad loans and the ‘Cypriot Solution’ dangling over uninsured depositor hordes.
Customers’ deposits at Italian bank Monte dei Paschi fell by “a few billion euros” … the bank said in a document posted on its web site on Saturday.
But it has yet to make clear what impact the scandal itself had on its first quarter results.
“The illicit nature of the derivatives trades and their consequence on the bank’s assets exposed the bank to reputational damage that was immediately translated into…the withdrawal of a few billion euros in deposits,” the bank said in a document for shareholders attending its April 29 meeting.
But he declined to give a forecast on the level of deposits at the end of the first quarter of 2013 or to indicate the outlook for net interest income and loan loss provisions.
A quick glance at BMPS’ capital structure shows that there isn’t a whole lot (read: almost any) of impairable securities below the unsecured liability (i.e., deposit) level. It is also obvious that when the bad debt impairment begins and depositors start getting whacked at least senior bonds, which should be pari passu, will feel the pain too as per the Diesel-BOOM doctrine, although we doubt this particular case of pain sharing will bring much comfort to any and all uninsured depositors in the oldest bank in the world.
The Sicilian regional government in Italy has revoked permission for the United States to build a military satellite station on the island, its governor said on Friday, after protests by residents who said it could pose a health risk.
The planned ground station is part of the Mobile User Objective System (MUOS), an ultra high-frequency satellite network aimed at significantly boosting communications capacity for the U.S. military and its allies.
Concerns about the effect the station’s electromagnetic waves could have on the health of residents around the town of Niscemi, including fears that the waves could cause cancer, have provoked protests on the island.
A U.S. military official said the United States hoped to allay any health concerns and would try to reach an agreement with the Italian government to get permission to build the facility.
Banca Monte dei Paschi di Siena, the world’s oldest surviving bank and Italy’s third biggest, on Thursday reported a net loss for 2012 of 3.17 billion euros ($4.06 billion).
Of that sum, the ailing bank — which has been caught up in a derivatives scandal — registered a loss of 1.591 billion euros in the fourth semester alone, it said in a statement.
Italian leftist leader Pier Luigi Bersani lost his bid to form a new government on Thursday after failing to break a political deadlock, leaving the eurozone’s third largest economy in limbo.
The ex-Communist had been given a mandate last week by Italy’s president to try and muster enough support to govern after inconclusive elections that left the country vulnerable on financial markets.
After six days of intense and often bitter consultations with rival parties, Bersani reported to President Giorgio Napolitano that he had not been able to gather the backing needed to rule.
“My work in these days has not led to a positive result,” Bersani said after talks with Napolitano.
The Democratic Party (PD) said their leader had not given up on forming a government.
“Bersani’s mandate continues, it is still operational,” a PD spokesman told AFP.
But observers said Napolitano could now move to choose a different figure to lead Italy.
Napolitano is set to hold a new round of consultations with the main parties on Friday, which are not expected to last longer than a day.
Bersani’s inability to muster support returns Italy to square one, after elections in February saw the centre-left scrape a victory in the lower house but fail to win a majority in the upper house.
Napolitano has said he is keen to avoid an immediate return to the polls.
British savers in Spain and Italy could be next to suffer a Cyprus-style raid on bank accounts if those struggling economies fail again, it was warned today.
Investors have reacted nervously in the two countries after it emerged the Cypriot rescue deal could be used as a template for other bail-outs.
Both are seen as the most likely contenders for any future bailouts.
Spain is in recession, having suffered badly from souring property loans, and data points to a further deterioration that will hamper Madrid’s efforts to rein in public finances and keep government borrowing under control.
In Italy, concern is focused on the fall-out from inconclusive elections a month ago that left the eurozone’s third-largest economy battling to form a government, raising worries that reform efforts would be impaired.
Matt Basi, head of sales trading at CMC Markets, told MailOnline: ‘The general perception is that were Europe to take another turn for the worse, they (Spain and Italy) are the two largest economies most susceptible.’
He added: ‘This (Cyprus) bail-out is a potential template for other bail-out packages.
‘It is a natural consequence of the way markets have evolved and the way finance ministers have taken a stance against publicly funded bail-outs.
‘People are more averse to governments pumping money into banks and taking the burden.’
Under the Cyprus deal, bank customers with more than £85,000 of savings will have a chunk of their cash – possibly as much as 40 per cent – seized to bail out troubled lenders.
Spanish and Italian bond yields rose yesterday after remarks from the head of the eurozone’s finance ministers, Jeroen Dijsselbloem, suggested it could be used as a blueprint elsewhere in the region.
There are an estimated 750,000 Britons in Spain and 30,000 in Italy.
Both countries were bailed out in a £600billion deal last year and are again showing signs of uncertainty.
by Tyler Durden
While some argue that Cyprus was “one of the biggest money-washing machines for Russian criminals,” and others that Cyprus ex-Pat community and energy resources brough deposits (not to say their high deposit interest rates), it seems the European Union (IMF et al.) have decided that the route to crisis stabilization, just as we outlined here over a year ago and updated here, is through a wealth tax.
However, as Handelsblatt reports, the gross distortions of wealth distribution among both core and peripheral nations (evident in the chasm between ‘mean’ and ‘median’ net assets – or wealth) makes some nations more ‘capable’ of ‘giving’ and as Commerzbank’s chief economist notes, median wealth in Italy is EUR164,000 (as opposed to Austria’s median of around EUR76,000 and mean of around EUR265,000) meaning that in theory Italy has no debt crisis (with net assets at 173% of GDP) – significantly more than the Germans at 124% - “so it would make sense, in Italy a one-time property tax levy,” he suggested.
“A tax rate of 15% on financial assets would probably be enough to push the Italian government debt to below the critical level of 100% of gross domestic product.” So there you have it, the ‘new deal’ in Europe, as we warned, is ‘wealth taxes’ and testing the “capacity of Cypriots” appears to be the strawman on what the public will take before social unrest becomes intolerable.
by Dan O’Brien
[...] Since the turn of the century, Italy has been one of the slowest growing economies in the world. Public debt as a percentage of GDP is now above 130 per cent (120 per cent usually considered a threshold above which the risk of default rises quickly).
If Italy has performed very poorly by most measures, it did make some progress before the crisis. Labour market reform, though not radical, did boost the employment rate in the years up to 2008, as the chart shows. But this was from a very low level and the proportion of adults at work remained well below to the rest of developed world. Since then, weak demand has undone much of the supply-side gains.
Other than very high public spending on pensions, there is little by way of a welfare state in Italy. Whereas Germans in some ways have the best of both economic and welfare worlds, Italians are in the opposite position.
Given the performance of the two economies and their respective reform histories over the past decade, it is not at all surprising that economists of most hues urge that the former adopt much of the latter’s Agenda 2010 reform model.
But that is now very unlikely. Such was the low level of support for pro-change parties in Italy’s election two weeks ago, it is very difficult to see the implementation of reforms that would give that country any chance of a return to decent growth rates.
The extraordinary performance of the Five Star movement amounts to one of the biggest shifts – if not the biggest – in the domestic politics of a euro zone member since the crisis started. Although not of the same sort of ideological extremes as some hard left and hard right parties, a pillar of the movement’s manifesto was withdrawal from the euro zone.
If Italy tried to recreate the lira under current conditions, capital flight would bring down its banking system, its sovereign and ultimately its economy. That one in four Italians voted for a movement advocating withdrawal says a great deal about how many Italians have come to see Europe.
Venice is built on an archipelago of 117 islands formed by 177 canals in a shallow lagoon, connected by 409 bridges. In the old centre, the canals serve the function of roads, and almost every form of transport is on water or on foot.
by Rachel Cooper
Data from Italy’s national statistics institute ISTAT showed that the country’s economy shrank by 0.9pc in the fourth quarter of last year and gross domestic product was down a revised 2.8pc year-on-year.
The economy was hobbled by chronically weak domestic demand and a fall in inventories, while exports posted modest growth.
Italy has been mired in recession since the middle of 2011 and is not expected to show any growth until the second half of this year at the earliest.
The economy contracted by 2.4pc last year and on Friday Fitch cut Italy’s sovereign credit rating, citing a deep recession, rising debt and political instability following last month’s inconclusive election.
Fitch Ratings Agency on Friday downgraded Italy’s credit rating to BBB+ from A- with a warning of a further downgrade, citing the uncertainty created by February’s inconclusive elections.
Fitch said the failure to come up with a clear winner makes “it unlikely that a stable new government can be formed in the next few weeks,” thereby harming prospects of further reforms.
The rating agency said Italy’s recession was one of the deepest in Europe, with an expected contraction of 1.8 percent in 2013. Fitch added that the size of the country’s debt as a proportion of its economy is expected to peak at 130 percent this year, higher than an earlier estimate of 125 percent.
Talks on forming a new government aren’t expected to begin before March 20.
The spokesman of Monte dei Paschi di Siena, an Italian bank at the center of an inquiry into suspected corruption and fraud, was found dead at the bank’s Siena headquarters, a judicial source told Reuters on Wednesday.
The body of the spokesman, David Rossi, was found covered with a sheet, beneath an open window overlooking a courtyard outside the building, a restored 14th century fortress.
Mr. Rossi, the head of the bank’s communications unit, was not under investigation. But he was among several people whose homes and offices were searched last month as part of an investigation into the lender’s purchase of Antonveneta in 2007 and subsequent losses linked to complex derivatives deals.
by Michael Snyder
Is the financial collapse of Italy going to be the final blow that breaks the back of Europe financially? Most people don’t realize this, but Italy is actually the third largest debtor in the entire world after the United States and Japan. Italy currently has a debt to GDP ratio of more than 120 percent, and Italy has a bigger national debt than anyone else in Europe does. That is why it is such a big deal that Italian voters have just overwhelmingly rejected austerity. The political parties led by anti-austerity candidates Silvio Berlusconi and Beppe Grillo did far better than anticipated. When you combine their totals, they got more than 50 percent of the vote. Italian voters have seen what austerity has done to Greece and Spain and they want no part of it. Unfortunately for Italian voters, it has been the promise of austerity that has kept the Italian financial system stable in recent months. Now that Italian voters have clearly rejected austerity, investors are fearing that austerity programs all over Europe may start falling apart. This is creating quite a bit of panic in European financial markets right now. On Tuesday, Italian stocks had their worst day in 10 months, Italian bond yields rose by the most that we have seen in 19 months, and the stocks of the two largest banks in Italy both fell by more than 8 percent. Italy is already experiencing its fourth recession since 2001, and unemployment has been steadily rising. If Italy is now “ungovernable”, as many are saying, then what does that mean for the future of Italy? Will Italy be the spark that sets off financial armageddon in Europe?
All of Europe was totally shocked by the election results in Italy. As you can see from the following excerpt from a Bloomberg article, the vote was very divided and the anti-austerity parties did much better than had been projected…
The results showed pre-election favorite Pier Luigi Bersani won the lower house with 29.5 percent, less than a half a percentage point ahead of Silvio Berlusconi, the ex-premier fighting a tax-fraud conviction. Beppe Grillo, a former comedian, got 25.6 percent, while Monti scored 10.6 percent. Bersani and his allies got 31.6 percent of votes in the Senate, compared with 30.7 percent for Berlusconi and 23.79 percent for Grillo, according to final figures from the Interior Ministry.
So what do those election results mean for Italy and for the rest of Europe?
Right now, there is a lot of panic about those results. There is fear that what just happened in Italy could result in a rejection of austerity all over Europe…
“I think the election results (or lack thereof) are a negative for the euro, which will likely keep the currency pressured for some time,” Omer Esiner, chief market analyst for Commonwealth Foreign Exchange, told me. But it’s not just the political uncertainty in Italy, he adds. “The shocking gains made by anti-establishment parties in Italy signal a broad-based frustration with austerity among voters and a decisive rejection of the policies pushed by Germany in nations across the euro zone’s periphery. That theme revives unresolved debt crisis issues and could threaten the continuity of reforms across other countries in the euro zone.”
And the financial markets have clearly interpreted the election results in Europe as a very bad sign. Zero Hedge summarized some of the bad news out of Europe that we saw on Tuesday…
Swiss 2Y rates turned negative once again for the first time in a month; EURUSD relatively flatlined around 1.3050 (250 pips lower than pre-Italy); Europe’s VIX exploded to almost 26% (from under 19% yesterday); and 3-month EUR-USD basis swaps plunged to their most liquidity-demanding level since 12/28. Spain and Italy (and Portugal) were the most hurt in bonds today as 2Y Italian spreads broke back above 200bps (surging over 50bps casting doubt on OMT support) and 3Y Spain yields broke above 3% once again. The Italian equity market suffered its equal biggest drop in 6 months falling back to 10 week lows (and down 14% from its end-Jan highs). Italian bond yields (and spreads) smashed higher – the biggest jump in 19 months as BTP futures volume exploded in the last two days.
Not that things in Europe were going well before all this.
In fact, the UK was just stripped of its prized AAA credit rating. That was huge news.
And check out some of the other things that have been going on in the rest of Europe…
In Spain, a major real estate company, Reyal Urbis, collapsed last week, leaving already battered banks on the hook for millions of euros in losses. Meanwhile, the government faces a corruption scandal and a steady stream of anti-austerity demonstrations. Thousands of people took to the streets again on Saturday, protesting deep cuts to health and other services, as well as hefty bank bailouts.
Life is no better in a large swath of the broader EU. In Britain, Moody’s cited the continuing economic weakness and the resulting risks to the government’s tight fiscal policy for its rating cut. In Bulgaria, where the government fell last week and the economy is in a shambles, rightists who joined mass demonstrations across the country burned a European Union flag and waved anti-EU banners. Other austerity-minded governments in the EU face similar murky political futures.
At this point, Europe is a complete and total economic mess and things are rapidly getting worse.
And that is really bad news because Europe is already in the midst of a recession. In fact, according to the BBC, the recession in the eurozone got even deeper during the fourth quarter of 2012…
The eurozone recession deepened in the final three months of 2012, official figures show.
The economy of the 17 nations in the euro shrank by 0.6% in the fourth quarter, which was worse than forecast.
It is the sharpest contraction since the beginning of 2009 and marks the first time the region failed to grow in any quarter during a calendar year.
But this is just the beginning.
The truth is that government debt is not even the greatest danger that Europe is facing. In reality, a collapse of the European banking system is of much greater concern.
Why is that?
Well, how would you feel if you woke up someday and every penny that you had in the bank was gone?
In the U.S. we don’t have to worry about that so much because all deposits are insured by the FDIC, but in many European countries things work much differently.
For example, just check out what Graham Summers recently had to say about the banking system in Spain…
It’s a little known fact about the Spanish crisis is that when the Spanish Government merges troubled banks, it typically swaps out depositors’ savings for shares in the new bank.
So… when the newly formed bank goes bust, “poof” your savings are GONE. Not gone as in some Spanish version of the FDIC will eventually get you your money, but gone as in gone forever (see the above article for proof).
This is why Bankia’s collapse is so significant: in one move, former depositors at seven banks just lost virtually everything.
And this in a nutshell is Europe’s financial system today: a totally insolvent sewer of garbage debt, run by corrupt career politicians who have no clue how to fix it or their economies… and which results in a big fat ZERO for those who are nuts enough to invest in it.
Be warned. There are many many more Bankias coming to light in the coming months. So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding, potentially taking down the financial system with them. Think I’m joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.
Like Graham Summers, I am extremely concerned about the European banking system. Europe actually has a much larger banking system than the U.S. does, and if the European banking system implodes that is going to send huge shockwaves to the farthest corners of the globe.
But if you want to believe that the “experts” in Europe and in the United States have “everything under control”, then you might as well stop reading now.
After all, they are very highly educated and they know what they are doing, right?
But if you want to listen to some common sense, you might want to check out this very ominous warning from Karl Denninger…
I hope you’re ready.
Congress has wasted the time it was given by the Europeans getting things “temporarily” under control. But they didn’t actually get anything under control, as the Italian elections just showed.
Now, with the budget over there at risk of being abandoned, and fiscal restraint being abandoned (note: exactly what the US has been doing) the markets are recognizing exactly the risk that never in fact went away over the last couple of years.
It was hidden by lies, just as it has been hidden by lies here.
Bernanke’s machinations and other games “gave” the Congress four years to do the right thing. They didn’t, because that same “gift” also destroyed all market signals of urgency.
As such you have people like Krugman and others claiming that it’s all ok and that we can spend with wild abandon, taking our fiscal medicine never.
They were wrong. Congress was wrong. The Republicans were wrong, the Democrats were wrong, and the Administration was wrong.
Congress is out of time; as I noted the deficit spending must stop now, irrespective of the fact that it will cause significant economic damage.
For the past couple of years, authorities in the U.S. and in Europe have been trying to delay the coming crisis by kicking the can down the road.
By doing so, they have been making the eventual collapse even worse.
And now time is running out.
In an earthquake result, the Five Star protest movement of comedian Beppe Grillo looked likely to emerge as the biggest single party in the lower house. The scourge of bankers and corrupt elites, Mr Grillo has campaigned for a return to the lira and a restructuring of Italy’s €1.9 trillion (£1.64 trillion) public debt.
The conservative bloc of ex-premier Silvio Berlusconi looked poised to win the senate, coming back from the political grave with vows to rip up the EU’s austerity plans and push through tax cuts to pull Italy out of deep slump.
“The majority of Italians have clearly voted against the Brussels consensus. That is a damning indictment,” said Mats Persson from Open Europe.
A euphoric rally on European bond and stock markets early on Monday gave way to abrupt selling as it became clear that Italy would be left with a hung parliament and no consensus over fundamental policies, leaving the country almost ungovernable.