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Bank Run! Italiano Style?

Reggie Middleton's picture




 

 

In March of 2010, or roughly 2 and quarter years ago, I ridiculed Italy's public proclamations of austerity and fiscal responsibility. I put out a report to my paid subscribers detailing my thoughts therein... 

Italy_public_finances_projections_Page_01

Well, fast forward to today and Bloomberg reports Italy Moves Into Debt-Crisis Crosshairs After Spain (you know, the same Spain that we also warned about in March of 2010): 

Italy’s 10-year bonds reversed early gains today in the first trading after the Spanish bailout. Their yield rose by the most in a day since Dec. 8, adding 27 basis points to 6.04 percent. Shares of UniCredit SpA (UCG), the country’s largest bank, had their steepest decline in five months.
“The scrutiny of Italy is high and certainly will not dissipate after the deal with Spain,” Nicola Marinelli, who oversees $153 million at Glendevon King Asset Management in London, said in an interview. “This bailout does not mean that Italy will be under attack, but it means that investors will pay attention to every bit of information before deciding to buy or to sell Italian bonds.”

 Investors don't need to focus on Spain's bailout (although there are many common threads). All you need to do is look at Italy's actual numbers and the credibility of thier reporting, as excerpted from BoomBustBlog subscriber document File Icon Italy public finances projection:

Italy_public_finances_projections_Page_02

Italy_public_finances_projections_Page_03

Back to Bloomberg...

Italy has 2 trillion euros of debt, more as a share of its economy than any developed nation other than Greece and Japan. The Treasury has to sell more than 35 billion euros of bonds and bills per month -- more than the annual output of each of the three smallest euro members, Cyprus, Estonia and Malta.
Spanish Economy Minister Luis de Guindos said on June 9 that he would request as much as 100 billion euros in emergency loans from the euro area to shore up a banking system hobbled by more than 180 billion euros of bad assets. Mounting concern about the state of Spain’s banks and public finances drove the country’s borrowing costs to near euro-era records last month, pushing up Italian rates in the process.
Reversing Gains.

Economy Contracting
Italy’s total debt of more than twice Spain’s has given investors pause, especially in a country where economic growth has lagged the EU average for more than a decade. The euro region’s third-biggest economy, Italy is set to contract 1.7 percent this year, more than the 1.6 percent in Spain, the Organization for Economic Cooperation and Development estimates.
Italy’s debt load had traditionally led the country to be perceived as a bigger credit risk than Spain. At the start of this year, Italy’s 10-year bond yielded 202 basis points more than that of Spain. As the extent of Spain’s banking woes became more evident and the country was forced to raise its deficit target, that spread reversed and now Spain’s 10-year yields 48 points more than Italy’s.
 

Foreign Exodus
Debt agency head Maria Cannata last week said that fewer foreign investors were turning up at Italian auctions in recent months and that the country could still finance at yields as high as 8 percent.

Yeah, but for how long? 4 weeks????

The exodus of foreign buyers has left the Treasury more dependent on Italian banks, which in turn have been among the biggest borrowers in the European Central Bank’s three-year lending operations.

And this is the crux of the whole problem. 

This why Italy is, for all intents and purposes, simply a gigantic Greece at the end of the day.

I have written about this extensively, and in plenty of time for subscribers and investors to take advantage of said advice. Simply read How Greece Killed Its Own Banks! and remember that this article was written in the beginning of 2010, when the Greek bonds were trading for much more then they were right before they defaulted! Then reference Greece Reports: "Circular Reasoning Works Because Circular Reasoning Works" - Or - Here Comes That Default!!!

Sovereign entities cannot fund themselves by borrowing from the insolvent entities that they actually need to bailout, but somehow they have convinced enough holders of capital that they can. To quote from "Sophisticated Ignorance"...

Again, public states bailing out insolvent private banking institutions simply does not work. The result is simply insolvent states and insolvent banks versus simply having insolvent banks. We have 800 years of experience from which to judge from...

image022

 

In Dead Bank Deja Vu? How The Sovereigns Killed Their Own Banks & Why Nobody Realizes They're Dead… I have explained this nonsensical methodology in detail. I also warned on the Italian banks back in 2010, for there is truly no new economic profits being produced in bulk - simply a continuation of the Pan-European Ponzi scheme. Subscribers see File Icon Italian Banking Macro-Fundamental Discussion Note 

Italy returns to markets before Spain does, selling as much 6.5 billion euros of treasury bills on June 13, followed by a bond auction the next day.
“If Italy has a problem with accessing the markets because investors lose confidence in the Italian ability to do the right thing, the ECB will be drawn into the fire,” Thomas Mayer, an economic adviser to Deutsche Bank AG, said in a telephone interview. “That could pose a potentially lethal threat to European monetary union.”

At this point, the ECB must be stuffed with more shit than a broken toilet, reference . We have been through this with Greece, Portugal, Ireland, Spain and now Italy.

ECB Firepower
Given the size of Italy’s debt, only the ECB has the firepower to rescue the country and yet deploying that ammunition -- through buying back bonds or making more long-term loans -- may prove unacceptable to Germany and its allies in northern Europe, Mayer said.
“The ECB will probably have to restart buying bonds but there will be a lot of sellers into that of people who are worried that Spain is the next Greece and Italy the next Spain,” said Lex Van Dam, who manages $500 million at Hampstead Capital LLC in London.

Go figure!

 

 

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Tue, 06/12/2012 - 14:47 | 2518931 AvenoSativo
AvenoSativo's picture

Talking about Bank-Run-Italiano, has it been mentioned on ZH that an old Italian bank (Bank Network Investments SpA - BNI) posted a note on May 31, 2012 that it takes holiday for a month (June), suspending all payments? This was done without any warning to its customers.

Someone explains it on YouTube ("Get Your Money Out!!").

On this page, there is an English translation and more info.

This page contains photos showing closed ATMs.

 

Tue, 06/12/2012 - 15:15 | 2519048 ArgentoFisico
ArgentoFisico's picture

True. Fact is that it's 42 years that i'm italian and never ever had heard of that bank till i found it here on ZH.

Tue, 06/12/2012 - 14:23 | 2518819 q99x2
q99x2's picture

Woof.

Tue, 06/12/2012 - 13:49 | 2518603 Zero Govt
Zero Govt's picture

How Greece killed its own Banks ...Circular reasoning works because circular reasoning works ..Sophisticated Ignorance

Nice headlining Reggie

the lunatics have taken over the asylum

couldn't you organise a ZH bloggers Bus Party up to Davos, Switzerland so we can infiltrate the loonies head crunching sessions and crunch their numbers?

i'll pitchfork their lead speaker so you can take the stand and talk some f'ing sense into the morons 

(just a thought)

Tue, 06/12/2012 - 13:29 | 2518590 jumblies
jumblies's picture

reggie - have you fixed the email address in the footer of your reports?  it's not @boombustlbog.com

Tue, 06/12/2012 - 13:31 | 2518589 ATG
ATG's picture

Reggie Rules:

We just took profits on SLV and SPY calls and bot SPY puts for the great bank deflation run...

http://silversenator2012.blogspot.com/

Tue, 06/12/2012 - 13:27 | 2518584 oldgasII
oldgasII's picture

Bank run Italliano. First wake up with an expresso and decide on what is appropriate to wear to a bank run.  Call Mama for her opinion.  Get dressed and leave for bank.  Feeling peckish stop off for bit to eat and talk with the regulars about it. Window shop a bit since it is such a nice day. Arrive at bank. Bank closed for the day.

Tue, 06/12/2012 - 20:09 | 2518653 Zero Govt
Zero Govt's picture

40% of Italys GDP is black market (free market) which is the only markets that'll be working soon

so i think the Italians are in better shape to handle the collapse of the official Govt and banking (regulated) sectors than most in Europe

it's obviously a deep tragedy (cough) when the public sectors throughout Europe collapse at the hands of the Govts own inept mis-management and glutony and the parasites gravy train comes into the station at ramming speed taking out all those civil servants in one 'black swan' accident (another Govt trainwreck, there's a surprise!)

couldn't happen to nicer folk

Tue, 06/12/2012 - 13:04 | 2518501 disabledvet
disabledvet's picture

Reggie is the only other one referencing not contagion but what I called (using a Donald duck billiard cartoon) KNOCK ON effects. In effect the euro has become "an option market" with your "countries" being the equities and "investors" placing various options strategies that suit their particular interests. Like the Internet "there's no turning this thing off." all that policy has succeeded in doing is the exact opposite of what it should namely a massive SPREAD WIDENING between the bid and ask of sovereign debt no less! In short "algo's running wild" while the SNB "marks time towards D(efault) Day (when the 120 peg collapses and all of Eastern Europe goes bankrupt immediately.) now the REAL insanity begins because all the debt trades (long Germany, short everything else) must be unwound. Rather than a titanic scenario this more like the Andrea Doria "capsizing" thing as everyone runs to other side of the ship and "over she goes." then what? "you got people trapped in there."

Tue, 06/12/2012 - 12:23 | 2518352 rufusbird
rufusbird's picture

"At this point, the ECB must be stuffed with more shit than a broken toilet,"

Love that one. Unfortunately, it is not the only CB in that condition. There are so many numbers out there that we have to pay people to sift through it. We are fortunate to get this infomation for free here on Zerohedge, from Reggie and others.

Tue, 06/12/2012 - 12:11 | 2518323 Divine Wind
Divine Wind's picture

Ya know, all you schmucks  who whine or leave little prissy comments when someone with a business posts content in that name really need to get a life. Start your own forum and try producing the breadth and depth of the content Reggie and the others post here. You will fall flat on your face. Perhaps you have tried and failed and this is why you are posting from your Mom's basement.

Many people on this site, myself included, have made piles of FRNs (rapidly converted to Au/Ag) off the insights Reggie and his compadres have chosen to share at no cost.

All I can say to Reggie is a hearty Thank You!

 

Tue, 06/12/2012 - 11:56 | 2518265 hotkarlandthecl...
hotkarlandtheclevelandsteamers's picture

Reggie your goog is getting slaughtered!!!  Can you admit you blew the call!!! 

Tue, 06/12/2012 - 12:02 | 2518288 derek_vineyard
derek_vineyard's picture

he didn't blow the call, he was under the influence of cnbc kool-aid

Tue, 06/12/2012 - 13:05 | 2518509 fourchan
fourchan's picture

re this implication,

this whole world ponzie is a big fucking greece

Tue, 06/12/2012 - 11:55 | 2518255 Jack Sheet
Jack Sheet's picture

They have to pay the Mafia protection money somehow

Tue, 06/12/2012 - 11:52 | 2518223 Ghordius
Ghordius's picture

Reggie, as long as France and it's banking system don't suffer too much, Italy will be "safe"... you'll see. Italy and France are the two countries that really, really tick differently when it comes to "bank runs" and similar things. ("safe" = as much as you can use this word, nowadays).

Tue, 06/12/2012 - 11:49 | 2518219 derek_vineyard
derek_vineyard's picture

buy goog, draft goog, have goog, love goog, tout goog = reggie

Tue, 06/12/2012 - 11:45 | 2518201 bigwavedave
bigwavedave's picture

Another promo from Reggie. Nothing new here. Move on

Tue, 06/12/2012 - 13:05 | 2518507 Imminent Crucible
Imminent Crucible's picture

Hey, it's free. And when the man's right, he's right. And Reggie is right over and over again. Been following him for two years.

Reggie needs to do more videos--Love that basso profundo voice, like Darth Vader. We'll call him Dark Vader in honor of Spaceballs.

Tue, 06/12/2012 - 12:31 | 2518386 Peter Pan
Peter Pan's picture

If telling the truth is a promo.....then let's have more of it. Something of value has to counterbalance the absolute rubbish dished out in the general media.

 

 

Tue, 06/12/2012 - 12:26 | 2518361 El Oregonian
El Oregonian's picture

The bouncey "Jigglies", although eye-catching, couldn't save you from being junked. Sorry...

Tue, 06/12/2012 - 12:06 | 2518302 Paul Atreides
Paul Atreides's picture

Reggie is spot on, intelligent, classy and spreading the message of truth and you bash him for it?

Ignore these douchebags Reggie, keep on doing your thing most of us appreciate it.

Tue, 06/12/2012 - 15:02 | 2518994 devo
devo's picture

He's great, but a little too eager to take off his shirt.

Tue, 06/12/2012 - 11:50 | 2518220 Zaydac
Zaydac's picture

Doesn't stop him from being right.

The mess is un-fixable.

Tyler was right all along. There will be a reset.

Tue, 06/12/2012 - 11:41 | 2518183 Mitzibitzi
Mitzibitzi's picture

So how long until this broken toilet backs up and floods the whole bathroom? End of the week?

Tue, 06/12/2012 - 13:26 | 2518580 lotusblue
lotusblue's picture

Reggie baby-Tell us something we don't know,Like when we should get pumps and mops out ?

Tue, 06/12/2012 - 12:23 | 2518357 El Oregonian
El Oregonian's picture

Check the bottom of your shoes....

Tue, 06/12/2012 - 13:05 | 2518508 clones2
clones2's picture

At the end of the day we are ALL Greece...   Just not sure right now how long the day is...

Tue, 06/12/2012 - 14:58 | 2518995 ArgentoFisico
ArgentoFisico's picture

Italy's not JUST one big Greece, sorry. Greece just exports some fish&feta and have some ships. Italy is still (not for long perhaps) what, the 8th or 10th industry of the planet, man! Be a little more accurate, please.

Tue, 06/12/2012 - 15:01 | 2519010 ArgentoFisico
ArgentoFisico's picture

What about the UK instead, dear mezzasega? What industry's left in little brittain? Finance. And what's world problem this time around?

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