Archive - Aug 11, 2011

Not even an hour after Tremonti addressed parliament discussing the various ways Italy would have to reform in order to meet European demands for austerity, the now traditional serial collapse of Italian banks resume, with the halt of the unholy trinity Unicredit, Intesa, Banca dei Monte Pasci, as well as Mediobank ensuing. Concurrently the same Italian weakness appears to have spread to France where BNP falls over 5% and SocGen down over 6%, affecting financials across the Eurozone, and sparking visions of a repeat of yesterday's collapse in European markets led by the fins. And while there is the usual plethora of rumors as to what may be responsible for this renewed weakness for now it is best not to speculate for fear of black helicopters, what is certain is that Italy's main opposition leader is setting the stage for a rerun of Greek daily strikes, by objecting to the balanced-budget plan at the heart of the Italian deficit cutting program. As Reuters reports, Italian opposition leader Pierluigi Bersani on Thursday rejected proposals for a blanket constitutional rule forbidding budget deficits but said his party was ready to support rules for greater budget discipline. Bersani said his party was ready to support measures to reinforce discipline in public finances but said it made no sense to impose unrealistic constraints on policy. "First, let's not talk about things that don't exist in any place in the world," Bersani said during a hearing of the parliamentary constitutional committee. "Balancing the budget in the constitution -- well, we don't intend to castrate ourselves for centuries from any possible economic policy." "So let's find a solution that has flexibility." Translation: we now have at best a few weeks before the strike (and riot) cam moves from Syntagma Square to Piaza Navona. As for Italian (and French) bank halts: our advice - don't exhale or the entire thing will collapse, and the smallest rumor will bring the European financial sector to a screeching halt yet again.

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