Once You Catch a Few EU Countries "Stretching the Truth", Why Should You Trust the Rest? We're Talking to You, Italy...

We have finished our review of the Italian "Austerity" plans to whip
its debt load into shape. As with Greece (see "Greek
Crisis Is Over, Region Safe", Prodi Says - I say Liar, Liar, Pants on
Fire!), we have found it wanting. Believe it or not, the biggest
issue is the credibility of the government. They stretch the facts,
assumptions and gray areas to the point where you tend to doubt
everything else. It is almost as if they believe no one will actually
read what they have written, which very well may have been partially
true in the past. Alas, that was the past and this is the present.
Information, and to a lesser extent, knowledge travels through the web
at the speed of atomic particles.  On that note, I release to my
subscribers the  Italy public finances
projection
2010-03-22 10:47:41 588.19 Kb.

For those that don't subscribe, I would like to make clear that my
assertions of flagrant and unsubstantiated optimism on the part of
European governments stem from how quicly they feel their economies will
grow despite the fact that they failed to see this maelstrom coming in
the first place.

This is Italy's presumption of economic growth used in their fiscal
projections:

The Greek government's macroeconomic
assumptions
also seem overstated when compared with EU estimates.

I don't think the EC's assumptions are sufficiently stringent enough.
Thus, if the EC is a little optimistic, what does that make Greece and
Italy?

 

Of course, if you still believe in the integrity of EU government
numbers, then I suggest you carefully plow through Smoking
Swap
Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer
Beware! Even the most naive and gullible of us will start to
doubt...

 You see, the Italian economic situation wasn't that great to begin with
since they were one of the hardest hit in the recession of 2009.

 If their overstatement of the ability to pull out of this falls flat
(which it most likely would) then you will see a spike in devt service
and interest, of course accompanied with the tried and true "Nobody
could have seen this coming" statement from the BIS. No, not the Bank
for International Settlements, but the Bureau of Internal BS (excuse my Italian).

 

Above, you see the Italian government projections of interest
expenditure as compared to ours. We have not fully factored in the full
potential of tax revenue collapse due to the after effect of a sharp
recession, but I do believe you get the picture.

Subscribers should reference the Italian
Banking
Macro-Fundamental Discussion Note  for a list of banks that may be
affected by the drag of excess debt on the Italian economy.

The Pan-European Sovereign Debt Crisis, to date: 

1. The

   Coming Pan-European Sovereign Debt Crisis

    - introduces the crisis
   and identified it as a pan-European problem, not a localized one.
2. What

   Country is Next in the Coming Pan-European Sovereign Debt Crisis?

    -
   illustrates the potential for the domino effect
3. The

   Pan-European Sovereign Debt Crisis: If I Were to Short Any Country,
   What Country Would That Be..

    - attempts to illustrate the highly
   interdependent weaknesses in Europe's sovereign nations can effect even

   the perceived "stronger" nations.

4. The

   Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western
   European Countries

5. The

   Depression is Already Here for Some Members of Europe, and It Just
   Might Be Contagious!

6. The

   Beginning of the Endgame is Coming???

7. I
   Think It's Confirmed, Greece Will Be the First Domino to Fall 

8. Smoking

   Swap Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer
   Beware!

9. Financial

   Contagion vs. Economic Contagion: Does the Market Underestimate the
   Effects of the Latter?

10. "Greek

    Crisis Is Over, Region Safe", Prodi Says - I say Liar, Liar, Pants on
    Fire!

     
11. Germany

    Finally Comes Out and Says, "We're Not Touching Greece" - Well, Sort
    of...

12. The
    Greece and the Greek Banks Get the Word "First" Etched on the Side of
    Their Domino

13. As

    I Warned Earlier, Latvian Government Collapses Exacerbating Financial
    Crisis

Comments

[M.G. in Progress]

I would like to make clear that my assertions of flagrant and unsubstantiated optimism on the part of Berluscfoni's government stem from the fact that he is unfit to lead http://mgiannini.blogspot.com/2010/03/parallel-lives-or-when-one-is-unfi....

He is the liar http://mgiannini.blogspot.com/2009/12/cognitive-dissonance-case-of-italy...

[DoChenRollingBearing]

Hey, if Italy gets busted out, make it quick so I can scoop up cheap € got a trip coming with my wife there.

.....

The President also failed to mention his tax hikes on unearned income (that came along with health care way back in 2010) in his speech there in Nov. 2012.  Or were you just summarizing his key points?

[tmosley]

I ...don't think you'll want to be traveling in Italy when this goes down.  I turned down an offer of the use of a friend's house in England because I'm expecting there to be civil unrest throughout Europe at any time within the next few months.  I don't want to get caught with expensive plane tickets I can't use, or worse, get caught in a disintegrating country...

[A Man without Q...]

I think you are overreacting somewhat.  The World Cup is this summer, and there's more chance of trouble if Germany knocks out England on penalties.  The idea of some sort of civil war breaking out flies in the face of history... unless they run out of beer.

[Matto]

Im in the same boat, have had an extended tour around europe planned for several years with partner and its pretty much locked in for this year. She doesnt really want to hear about the potential situation over there, so im just going to keep one ear on the ground and be ready to get out at short notice.

Am considering currency options now, considering we're in Australia an economic crisis may mean a flight to quality and a pull out of our dollar even if its european based.trying to decide whether to put half our trip money into euros now or roll the dice and put it in USD.

[Budd Fox]

Way too early to factor in civil unrest in UK or Italy now , for what matters...just came back from a trip to Italy to NZ, and i think the real mess will begin in 2012...not now.

On the Euros...if you are leaving in more than 3 months, roll the dice and  go to USD and if you are leaving now...get the EUR now.

I am bearish on AUD/NZD in the short run just for that "refuse risk" effect...

Have fun in Chiantishire...no matter what can go wrong the food and the wine will always be superlative. I know...I used to live there...till I thought NZ might well be the safest place on the planet.

[Matto]

solid logic, cheers. im having the same thoughts of NZ from just across the sea..

[Madcow]

What goes up must come down. 

Accounting fraud is the only possible solution to the problem of delevering-induced asset destruction.

The financial products people bought over the last 40 years were DEPENDENT upon economic and money supply growth. Once the slope is no longer positive - but flat or negative - the value of financial assets goes immediately to ZERO. 

"Sorry folks, but all that money you've been investing over the years in your mutual funds, stock funds, bond funds, insurance policies, annuities, and so forth and so on ... well, the money is gone.  You got tricked fair and square, and now its time to move on."

- President Barack Obama, November 2012

[mr brincq]

thanks reggie....check this out...and have a laugh...

http://www.youtube.com/watch?v=Bf6mtTFCgwQ