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Columbia Prof Who Called Argentina Crisis: "Corruption Is The Reason Italy Will Be Next"
Columbia's Charles Calomiris, who predicted the Argentina sovereign debt crisis (not sure which one: do people actually keep count?) was on Bloomberg TV spreading some more logic, first as pertains to those satanic monsters better known as CDS traders with the following piece of brilliance - "the CDS market always requires two parties in any transaction." This is something that everyone tends to forget. Unlike stocks or cash bonds, where the whole concept of Zero Sum is somewhat murky (especially in naked shorting) in derivatives it is precisely that - one man's loss is another man's gain - no exceptions. Why is nobody scapegoating those traders who enable the speculators to exist? If you raise the CDS offer high enough nobody will buy - we could just as easily blame the CDS sellers for their stupidity and willingness to take on capital losses. But as the whole topic of CDS speculators is pretty much a dead horse at this point. Calomiris also points out another obvious feature of the Greek speculator raid: "the spreads that we saw in Greece at their worst in the CDS market were about 4%. Based on what we know from the history of sovereign crises given the current fundamentals in Greece if anything that is a very muted response in the market. I would have expected a much greater response and I think we will see a much greater response..." Second, Calomiris says that the next country to fall after Greece will be not Spain, but Italy - the reason: massive governmental corruption.
And here is what is the real problem - someone please notify Papandreou.
"This is just a case of shoot the messenger. I think we need to focus on the unsustainable situation that Greece has gotten itself into, with the highest consumption to GDP ration in Europe, one of the lowest labor force participation rates in Europe, one of the highest government social protection rates in Europe, and deficits that have been outsized for several years during the boom, and the of course the fraudulent accounting. I should also note that within the Eurozone, Greece has the worst corruption score according to Transparency International which is a problem because it is telling you is that the institutional quality of the Greek government for reforming itself is very low."
Not surprisingly the next casualty of the rolling crisis (because, to quote Dubya, make no mistake, the crisis will be back very soon) will be not Spain or Portugal, but Italy - another nation using swap gimmickry to enter the Eurozone back in the day.
"The real concern right now should be on Italy. Italy is the country that is most like Greece in this current situation. Highest Debt to GDP ratio, not as high deficits so with smaller changes they can stop the problem. They also, however are very corrupt. They are second to Greece in the level of corruption within the Eurozone."
As a reminder, Italy CDS trade in the low 90s. Evil, hideous speculators - dig in.
Full clip after the jump:
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e un calamari
Mama mia!
bullshit, the US and EU is more corrupt than Italy and corrupt in their case is the good kind, low taxes. Fuck those who think full scale gorgonzola corruption can be compared to a little swiss cheese, pizza kickbacks and pasta back handers
There is no place on earth MORE corrupt than Italy. And yes, the EU and US are AS corrupt as Italy.
Hey the Indians might take offense.
totally agree. The f'in taxi drivers in Rome are the worst!
No...try again.
http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi...
Will the first domino just hurry up and fall already, where's those pesky damned black swans when we need one? Tyler, I honestly cannot wait for the day when I get home, make a coffee, log on to ZH and see an article titled "This is the end" with about 1286 comments... Looking forward to heading home to the sticks haha ;-)
What is it that makes people like Wake and me say this kind of thing?
I agree.
I am not sure why, but I'm more than ready for all the shoes to drop. My motivation for feeling this way is of paramount importance to me, lest I think myself a cad. I think it might be simply that I can only last for so long, and the Fed et.al. can go on printing money and bailing themselves out 'till infinity comes. I'm a survivor, but I don't know how much longer I can make it!
Another reason, I guess, is that I just want to see the assholes who got us into this mess, along with the OTHER assholes who keep telling us that everything's going to be O.K., finally meet their hubris. I'm a big 43 year-old dummy, but I've known something was wrong since I was 14. I just didn't know what it was. I always trusted that those in authority and the Obligation of the Noble would keep things on the straight and narrow.
Now I see I was right all along. 2+2 DOESN'T = 5, no matter how many progressives it takes to screw in a light bulb.
I'm ready for the reset button. I want to see, as Tool calls them, the "Thousands of Dumfounded Dipshits" standing around wondering what happened.
I share yours and other's feelings like yours.
However, if we all stay out of the market and mutual funds, move our money out of the big banks and jump on precious metals, we will starve the beast.
Friends, family and I did it.
Meanwhile life is going on and we are just watching.
Not a good bet to make cause you'll only be right once and even then it wont matter... because the government will bail you out.
I am sorry but I cannot take seriously any pundit that comes out of the US university system.
Whatever the fundamentals of the situation this is just a manure spreading exercise.
To give the Italians some credit they are at least more open about their corruption while the boys in New York and London amazingly still pretend that with a few minor exceptions they are the Paragon of virtue.
Give me a break.
"To give the Italians some credit they are at least more open about their corruption."
So you are saying he is wrong and Italian corruption is not a significant negative factor? If so, please give details as to why. Or are you rejecting his point simply because he is a US university system product? If so, please show us all a university system whose leadership is not corrupt so we can listen to all the pundits that originate from that system. I see why the folks with ZH & Co, stay anonymous.
In case you missed it:
Euro "Creator" Robert Mundell: Greece Is Not Biggest Threat To Euro, Italy Is.
http://www.zerohedge.com/article/euro-creator-robert-mundell-greece-not-...
Note: Mundell was educated in the States, Canada and London.
The whole western system is diseased but I think pundits generally speaking about chinks in the armour of specific countries are talking their book and have another agenda ,besides in the most recent interview of Robert Mundell he spoke of the grave mistake of leaving the euro appreciate against the Dollar - he also has a hidden agenda , it was just senility that let his hidden agenda be exposed in that interview.
He's right. Even with people like Barney Frank, Barack Obama, and Rahm Emanuel in the White House, Italy is still more corrupt. Barely.
Baksheesh
The guy does have a point. Check out these country rankings:
http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi...
That list is such BS.
Saint Lucia and Qatar rank higher than France? Dominica ranks higher than South Korea? wtf?
The sort order seems to be by countries most accepting of the new world order.
I was unaware of the existence of #162 Kyrgyzstan.
Clearly the US should be pleased to be one step above Barbados. Must have to do with our Congressmen getting discounted loans from Fannie. So they have that going for them....which is nice.
We have troops there.
They want Italy's gold reserves...they'll probably get them...poor paisan's
reminds me of the man from malta..onlt they really are going to get the fork ...big time
http://www.youtube.com/watch?v=m1TnzCiUSI0
This was in Tavokoli's article today...
[U.S. credit default swaps currently trade in euros. After all, if the U.S. defaults, who will want payment in devalued U.S. dollars? The euro recently weakened relative to the dollar, and market participants are calling for contracts that require payment in gold. If they get their way, speculators on the winning side of a price move will demand collateral paid in gold.
The market can create an unlimited number of these contracts very rapidly. The U.S. wouldn't have to ever default to trigger a major disruption in the gold market. Spreads (or prices) on the credit default swaps could simply move based on "news," and demand for gold would soar.]
Heads or tales. Call it.
In Italia, corruption is honest, up front, in your face. The toll-taker on the autostrada will ask "Do you need a receipt or can I pocket this?" Politicians will tell you their price. The government keeps statistics on the underground economy (20% of GDP).
In Amerika, we jail drug dealers on whom law enforcement depends for their livelihood. We do not bribe politicians, we make campaign contributions via non-profit foundations and PACs. We pride ourselves on our free enterprise system yet the government openly supports insolvent and unviable businesses.
Our financial markets are a rigged Ponzi scheme obfuscated by layers of regulators in charge of ensuring transparency and a level playing field, wholly owned and fully staffed by an outfit that can only rake in $100M a day in trading profits.
We are a more civilized kleptocracy than those barbarians who openly steal!
Investment advice: buy physical gold and silver. Pack it into a few carry-on wheelies and you and your loved ones get your asses out of dodge. Settle down in a tropical paradise like Costa Rica, the Philippines, or the warm and friendly place of your choice. Do not come back until all the blood in the streets have been cleaned up (if then).
If you want to live in a free country, you must stay back and help kill the beast.
Going away is the easy way out.
Don't forget that the reason we were free until lately, is because previous generations faught for our freedom.
"In Italia, corruption is honest..."
Do not forget:
War is peace.
Freedom is slavery.
Ignorance is strength.
Napoli must be the honestest place in the entire world.
How do you expect to get all that gold and silver to another country, and keep it? or do you bury it in a national forest?
Anonymous:
Your initial posts appeared obnoxious. Then upon continued reading, they started to make sense. This one is particularly worthy.
Need remembering that for every buyer theres a seller, every long a short? Yee Gods, bring the wrath of the SEC down upon us? Oh, they'd miss that too, I guess.
The corrupt Commies have a child born with a Commie spoon as their flag bearer.
A more vile a Gran-duca in waiting has rarely been seen when comparing to the crown turd D'Alema.
I giggle until I pee my pants every time I read about how India, Russia, China, Greece, Afghanistan , and now Italy are corrupt.
Wake up sheeple. The USA is the center of greed and corruption. Every other nation is amateur hour compared to us.
How many prosecutions from the biggest financial collapse since 1929 ?. No fraud to be found. ?.. Cept that fool madoff who turned himself in..
Please people... Get a clue.
Nikki..
Mainly due to the incestuous suck-holing of MSM & Govt Thuggocrats. We in the West, can only read about how bad Thailand is, BAD, how bad Indonesia is, BAD and now, how rotten Italy is. We are Fooked simply because we have lost the ability to be honest.
Its that simple.
I do not in any way, shape or form trust the Chinese, but, sadly, I now trust the USSA even less than the obnoxious Chinks.
regards
Japan will be next.
The situation at Toyota (increased expense, loss of sales and reputation) will spawn (some) contagion to other Japanese export products and the combined effect will push Japan out of it's decade long malaise.
if corruption is the measure, USA goes next
madoff/sec, fnm, fre/congress, our sec'y of treasury is a tax cheat, obama yielded to banksters, invaded iraq, etc
anybody tries to argue that italy is worse than the us gov't is a stooge
Well that's where we are. As corruption institutionalizes itself it becomes very self protective. We are seeing this with the massive attention and efforting at spying against it's citizens, collecting data to use to distort a persons reasons for attacking the government etc etc. It's an evolutionary tipping point where something becomes the great white shark and sees no reason to change since it believes no one is able to force it to. This results in massive disconnections of society. The muscles of law enforcement become extremely weak in these instances and even normal corruption fighting OUTSIDE the inner circle becomes severely hampered.
People actually want authority to be extremely punitive. But they also want it to judge for them instead of against them. No regular citizen will have anything remotely resembling justice until everyone becomes equally authoritative. Which we are seeing. I'll listen to a nutjob on the internet versus Al Gore any day.
Umm...did everyone just forget about the USA, which is more bankrupt than the entire UNIVERSE combined?
Va fan Culo Calomoris, the Italians will be standing long after many others fall.
Corruption, sure, but the economy operates just fine with it.
The "black" money economy is actually higher than the 20% mentioned earlier, it is closer to 30%, and in some places 40%.
The barter system is alive and well in Italy, and the Italian people have very low personal debt.
If anyone is looking for a place to live out the Armageddon, which is fast approaching, Italy is a better place than most.
Many people are still only a generation away from living off the land, and if not, they have many friends and family who still do. Not many people in America are raising and killing chickens anymore.
Italians do not consider money a sign of wealth, in Italy you are wealthy based on the number of friends you have, and who you know.
They could care less when the debt bomb explodes.
"In Italia, corruption is honest..."
Do not forget:
War is peace.
Freedom is slavery.
Ignorance is strength.
Napoli must be the honestest place in the entire world.
I've lived in Italy for the past 19 years and corruption continues to be a problem even after the Mani Pulite (clean hands) corrution trials in the early 90's. The blatent clientelism which has generated enormous waste is not only omnipresent but is widely accepted by the Italian electorate. There is a pervasive concept of "acquired rights" (early retirement age and high pensions for example) which catalyzes a vicious cycle of corruption and political fossilization. There is no ploitical will to change and the Italian peolple demand no accountability from their leaders (sound familiar USA).
Without the Euro, Italy would have already gone the way of Argentina. (Fiscal discipline with a little cheating is better than no discipline at all.) Perhaps there's still time to avoid distaster but the magic of compounding interest is working against any solution in a country that lives the day and considers long term 6 months. La fortuna è ceca ma la sfiga ci vede benissimo. (Luck is blind but misfortune sees us very well) Speriamo bene! Carpe Diem!!!
I'm italian so i'm talking with knowledge of the facts:
italy is the #2 in the corrupt nations ranking...
but our politicians and bankers are chicken thieves compared to goldmanites and big boys
big boys want our gold becouse our vaults aren't empty like that of fort knox...
a new round of fire sales is coming in italy (like in the 1992.. remember the Britannia ship story?),
our liquidator will be mario draghi... i hate silvio but God forbid supermario as next prime minister
it is astonishing like ex goldmanites have fuck and will fuck our nation.
First Romano (jam) Prodi made in 1997 the deal with the loan sharks
Second supermario draghi will be the liquidator of our assets
in italy we need a nationalist leader who tries to start a gold backed currency...
what an earthquake will be in the currency universe...
and you can bet the day after tanks in our streets will sudden follow (US, not russian tanks!).
eugenioca
I'm italian so i'm talking with knowledge of the facts:
italy is the #2 in the corrupt nations ranking (Usa is #1)...
but our politicians and bankers are chicken thieves compared to goldmanites and big boys
big boys want our gold becouse our vaults aren't empty like that of fort knox...
a new round of fire sales is coming in italy (like in the 1992.. remember the Britannia ship story?),
our liquidator will be mario draghi... i hate silvio but God forbid supermario as next prime minister
it is astonishing like ex goldmanites have fuck and will fuck our nation.
First Romano (jam) Prodi (ex GS) made in 1997 the deal with the loan sharks
Second supermario draghi (ex GS) will be the liquidator of our assets
in italy we need a nationalist leader who tries to start a gold backed currency...
what an earthquake will be in the currency universe...
and you can bet the day after tanks in our streets will sudden follow (US, not russian tanks!).
eugenioca
hello everyone,
first of all i read you often but don't write a lot, and please excuse my english.....
i am italian and live here currently and must say that everything is true, high corruption, managing class that is old, always the same and never changes (we have people in parliament for 50 years... yes 50 years they are there....), Berlusconi doesn't help, and of course mafia, camorra and n'drangheta which make a lot of italian GDP... so we are not well set, and of course if we weren't in the Euro we would be down in Africa... that's by sure.... sounds all very bad.... and in part it is...
but also keep in mind a few points:
- italy has also a black economy that is almost the same as the white economy... this is cash money going around the country and keeps things up...
- italians are not in that high private debt as other western countries... italians are savers so if you want to see the government debt less the private, it is not that bad as statistics show....
when we had to get into the euro the economy wasn't good and they had to fix the accounts they just put a tax and went directly into the private accounts in the banks and got out 1% of the deposit you had in the bank......
- there is the vatican here..... lot's of power and lot's of money and connections.....
so this doesn't make things nice, but indeed belive it makes them less bad......and i think that if the worst comes to the worst they will just "ask" italians to put in some money... maybe it will go like Iceland and italians go on the streets and fight, but probably the state will just to and fish in the bank accounts another 1\5\10% of each private holdings.....
Having a black economy that size makes it just harder for the government to tax/pay and rollover its public liabilities and this should speed the hard lending. The debt Italy currently runs still belongs to the italian people as a whole and therefore italians' wealth is much less.
Wednesday march 10th 8 am Bloomberg >. Romano Prodi says ; Greece and the other countries ( pigs ) are all safe , the crisis is over... this tells me the The Federal Reserve / Pallet Tim made a secret deal yesterday..... what do you all think...?
Nobody ever talks about the Olympics orgy.
Well Ladies and Gentlemen, All of you are right! I will advise you of one thing nobody has mentioned. That Bam-Bam (obama) and his gang of socialistic cohorts will be sitting on the front steps of the White during the summer of 2011 eatin' chicken and drinkin' orange crush soda when Bam-Bam has a startling thought.....
... why don't we just declare bankrupcy wash away all of our debt and we can fresh all-over again.... that's what I'll tell the population ... they'll believe me...they love me...
the other side of the CDS trade is usually a bank with deposits insured by FDIC or some big insurance company bailed out by the governemnt, i.e.AIG, so in any case, so it is always tax payers, you and me who underwrite CDS
from PRG
Italy has indeed two economies,one black one white.
And that is fine for me.How can Europe compete with
Asian,South American yes American economies without
having a "black" economy?Italy is still a major player in the worldeconomy.so be it.
How can a European country with heavy taxation and no room
to play(black money)compete with the rest of the world.And giving away free social security to all the immigrating
people who do not want to work,who cost(a lot) of money,crime,etc
The efforts of American journalists should at this point be targeting the one place that actually needs to know how much trouble they are in, and that is the U.S. All these stories about other places being corrupt and bankrupt will serve no purpose other than to deflect the reality that is the U.S. today. The U.S. is the most bankrupt and corrupt country in the world, in my opinion.
At least, if I need something to happen fast in Ecuador or in Columbia, I am the only one paying for it if I have to give the official a $20 bill to make it happen. In the U.S., everyone gets the honor of paying, even if they do not need a service.
America needs one thing right now, and that is a mirror to look into, and look into as long as it takes for the people to realize that they need to get informed and then move towards taking their country back from the octopus that is sucking the life out of it, and when it is done, it will move away to another place, leaving only carnage and destruction.
It is coming from within, my American friends. There is no need to look beyond your borders for your enemy. Your enemy is in the U.S., and it makes the decisions that will ruin your country forever. You elected them, after all.
I hope that the people of America will rise up and take back their country. Good luck to you.
Dear Calomoris put your professor pay where your mouth is and buy from me some CDS on Italy sovereign debt.
We all know Transparency's hot dogs don't like mafiosi, only Deutschland's Total External Debt vs GDP is far higher than Italy's.
But you'rz right, Spain and UK won't fall. So can you sell me any CDS on either?
If Italy government is corrupt what is then Russia?
90% of the wealth is in the hands of 100 oligarchs who instruct Putin how to tell bottom from top and left from right.
Don't forget: Russia defaulted triggering a financial crises ( LTCM etc.) although it had the world's largest ressources!
That had only one cause: corruption from the Siberian village official to Yeltzin.
voi siete tutti pazzi. l'italia rimarra' in piedi lungo dopo tutti gli honesti se ne saranno andati a fare in culo
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