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Chart Of The Day: Europe's Resolution To Unpaid Bills? Ignore Them

Tyler Durden's picture


Curious how Europe's insolvent peripheral countries, where the government is increasingly the only source of demand (if not funding), have managed to avoid falling into a primary budget deficit abyss? Simple: instead of paying their outstanding bills, Europe's insolvent nations are simply not paying them. And with the entire European bond market now a central bank controlled policy mechanism, meaning there are no longer any checks and balances to keep governments honest, there is no pressure on said countries to actually pay. Hopefully those companies on the other end of these unpaid invoices have as generous a benefactor as the ECB to fund their now persistent and growing undercapitalization.

From the WSJ:

Overdue payments have long been a bigger problem in southern Europe than in the north. The debt crisis that has restricted lending to peripheral euro-zone governments is aggravating the problem, which is rising in Greece and Italy as well. Spain's crisis, set off by the collapse of a real estate boom nearly five years ago, is particularly acute in areas where declining revenue from real estate taxes pummeled municipal and regional finances.


Suppliers are depleting their cash reserves, forgoing investments and postponing payments to their own providers.


Many have dismissed workers, pushing up a national unemployment rate that exceeds 25%. A growing number are filing for bankruptcy—27% more through September of this year than in the same period in 2011, according to Spain's judiciary.

And the stunning graphic that shows why Europe is still #1 in football, and can kick the can the farthest of all:

h/t GreekFire23


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Wed, 01/02/2013 - 08:51 | 3114434 Tao 4 the Show
Tao 4 the Show's picture

Spoke with a finance guy recently who was working a transaction with the Italian govt. They killed the project midway breaking the signed contract conditions. No recourse for the financial company. Who could they complain to?

Wed, 01/02/2013 - 08:55 | 3114440 Rubicon
Rubicon's picture

The Mussolini family?

Wed, 01/02/2013 - 09:06 | 3114442 GetZeeGold
GetZeeGold's picture



They just didn't give that cat enough time.


Spoke with a finance guy recently who was working a transaction with the Italian govt.


Wow....on purpose?

Wed, 01/02/2013 - 09:33 | 3114501 Rip van Wrinkle
Rip van Wrinkle's picture

Don't be ridiculous. The Mafia fami....oh, shit, of course, I forgot.

Wed, 01/02/2013 - 11:56 | 3114924 Element
Element's picture

Shouldn't Italy be somewhat less distressed than Spain in that graph?

Apparently not.

Wed, 01/02/2013 - 13:50 | 3115272 gionata
gionata's picture

There is a long tradition in Italy of long overdue payments by private companies and the government as well. A law just went into effect on Jan 1st to force the public administration to pay its creditors net 30.


Wed, 01/02/2013 - 21:30 | 3117186 thisandthat
thisandthat's picture

Meanwhile in Portugal, since in 2008, the goal is for a 90 days average for state owned companies, hospitals, etc.:

Here's the list of those that didn't meet that goal in 2012:

Same list for 2009 to 2011:

Fancy a 2 years delay? - come do business in Portugal... :)

For the record, here's how quarterly avg delay is calculated:


where PMP is the avg delay, t is quarter, DF is quarterly short term debt to suppliers, and A is quarterly paid/unpaid purchases.

Wed, 01/02/2013 - 09:04 | 3114454 zilverreiger
zilverreiger's picture

Should teach that finance fascist to play with fire.

Wed, 01/02/2013 - 09:45 | 3114527 Irelevant
Irelevant's picture

What do you mean what can they do? Bring the matter before a court of law, and, in 10+ years have a enforceable title against the Italian state :)... if they are lucky.

Wed, 01/02/2013 - 08:54 | 3114436 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I think Illinois, California and New Jersey need to be added to the chart to compare.

Wed, 01/02/2013 - 09:00 | 3114446 CPL
CPL's picture

Time to reinvent the monthly sur-charge on invoices to close the inflation gap in the end of day charge.

Wed, 01/02/2013 - 09:14 | 3114474 otto skorzeny
otto skorzeny's picture

speaking of IL-the word on the street is they're going to ram a TOTAL gun control bill through in the next few days in the lame duck session which ends on the 9th.would ban basically everything AND nothing is grandfathered with a small window to turn weapons in to Il State Police. the fascists know what is coming and they want to disarm the populace beforehand.

Wed, 01/02/2013 - 09:22 | 3114485 SheepDog-One
SheepDog-One's picture

Well, maybe Illinois is where the revolution starts....they'd shit if millions of americans went there to help shut down their total gun ban efforts. Sure they can sign a piece of paper, now they just have to enforce it. 

Wed, 01/02/2013 - 09:30 | 3114492 GetZeeGold
GetZeeGold's picture



I don't think they'd better mess with southern Illinois. Them Dixie boys don't play. Word is those guys don't think much of them yankees.

Wed, 01/02/2013 - 09:36 | 3114503 otto skorzeny
otto skorzeny's picture

IL is pretty conservative once you get out of Cook County and the brownish, adjacent-to-the-city-burbs

Wed, 01/02/2013 - 09:29 | 3114490 SmallerGovNow2
SmallerGovNow2's picture

How can they do that when the courts just ruled that Chicago's ban was unconstitutional?

Wed, 01/02/2013 - 09:33 | 3114500 otto skorzeny
otto skorzeny's picture

do you really need to ask that in this day and age? THESE PEOPLE DO WHAT THE FUCK THEY WANT TO

Wed, 01/02/2013 - 09:41 | 3114516 gckings19
gckings19's picture

illinois is the worst offender...they may make greece look good.

Wed, 01/02/2013 - 09:43 | 3114521 Meatballs
Wed, 01/02/2013 - 08:53 | 3114437 SpanishGoop
SpanishGoop's picture

And here is The Wimpy rule again, "I'll pay you on Tuesday for a hamburger today".


Wed, 01/02/2013 - 09:00 | 3114450 cossack55
cossack55's picture

Give him a fast food pink slime burger with GMO bun and you won't have to worry about Wimpy showing up again much longer.

Wed, 01/02/2013 - 09:00 | 3114449 holgerdanske
holgerdanske's picture

It is maybe difficult to really get a grip on, but if you can just print money, you can always pay the bill.
This can continue seemingly ad infinitum, until it certainly no longer can. The only thing that will stop the madness is when people loose the belief in the paper money that is being bandied around.
That day will come: when, is the question. And, how you position yourself will be important. You might just loose more than your shirt!

Wed, 01/02/2013 - 11:24 | 3114824 From Germany Wi...
From Germany With Love's picture

But you can't print money at will if you're locked into a single currency with Germany.

Wed, 01/02/2013 - 09:02 | 3114453 youngman
youngman's picture

Well just think about it..if you are writing the checks and you could pay your salary...or pay some nasty mean greedy corporation...who would you pay.....yes you are a WINNER...its me me me

Wed, 01/02/2013 - 13:55 | 3115207 RKDS
RKDS's picture

Well just think about it..if you are writing the checks and you could pay your bonus...or pay some nasty mean greedy workers...who would you pay.....yes you are a WINNER...its me me me


Milton Friedman supposedly said that if you subsidize something you get more of it.  Well we've certainly been subsidizing sociopathy for long enough.  Moral hazard: it's all fun and games until everybody figures it out and joins in.


Wed, 01/02/2013 - 09:03 | 3114455 Monedas
Monedas's picture

How's the view from up inside one's asshole .... rosy ?

Wed, 01/02/2013 - 09:20 | 3114481 SheepDog-One
SheepDog-One's picture

Apparently, VERY!


Wed, 01/02/2013 - 09:39 | 3114510 Monedas
Monedas's picture

The view from the "Rectum Spectrum" !

Wed, 01/02/2013 - 09:05 | 3114458 chinaboy
chinaboy's picture

Who are the debtors of those unpaid bills ?

Wed, 01/02/2013 - 09:08 | 3114465 Sheeple Shepard
Sheeple Shepard's picture

Drum-roll.........................YOU ARE!

Wed, 01/02/2013 - 09:20 | 3114480 debtor of last ...
debtor of last resort's picture

I am.

Wed, 01/02/2013 - 09:06 | 3114463 Sheeple Shepard
Sheeple Shepard's picture

Hear no evil, speak no evil & see no evil economics is ramping these markets big time baby!

Someone give them monkeys a Si-gar.

Wed, 01/02/2013 - 10:34 | 3114654 tango
tango's picture

It's a new type of evolution - one toward greater inefficiency and chance of survival.   Markets go up if things sound good (rumor) or if things are bad (FED intervention) or on phony "deals" or by sheer inertia.  As overall markets increasingly become separated from reality, look for a last desperate measure - everyone piles in on this last hurrah, the mother of all bubbles.

Wed, 01/02/2013 - 10:44 | 3114678 Sheeple Shepard
Sheeple Shepard's picture

Agreed. The muppet Jonestown massacre is on its way and its not going to be pretty.

Wed, 01/02/2013 - 09:10 | 3114469 falak pema
falak pema's picture

circa 1900 : thats what the ottoman empire looked like. And, as a result every local administrator was living off the "underground" economy taking his cut.

As we know Greece and Italy are already there bigtime. In Italy the underground economy is reputedly 20-30% of GDP. 

Wed, 01/02/2013 - 11:54 | 3114919 ShrNfr
ShrNfr's picture

It was 50% a couple of decades ago.

Wed, 01/02/2013 - 09:11 | 3114470 Schmuck Raker
Schmuck Raker's picture

"Europe" & "Resolution" in the same sentence!! LOL

Damn, you're good Tyler.

Wed, 01/02/2013 - 09:16 | 3114476 Catullus
Catullus's picture

Remember when California was going broke in 2010 and they just didn't pay suppliers? Hell yeah, this happens in the US. And they love pinching utility companies when they don't want to pay their bills, knowing the power or gas company won't shut off service.

Wed, 01/02/2013 - 09:18 | 3114479 SheepDog-One
SheepDog-One's picture

Just proves none of the numbers even matter at all, they'll do what they want.

Wed, 01/02/2013 - 09:28 | 3114483 Monedas
Monedas's picture

Kick of the "Can Can" .... A stage show dance popular in the "Gay '9Os" in the burlesque theatres of Paris where the dancers kicked their legs so high .... you could see both of their buttocks .... the original "Kick of the Can Can" !  "Yes we can Can Can !".... O. Bama

Wed, 01/02/2013 - 09:28 | 3114488 zilverreiger
zilverreiger's picture

Is "0" the end of the payment term of the contract, or the beginning?

Furthermore the graph merely shows they do pay,  just later.

Wed, 01/02/2013 - 09:38 | 3114498 Monedas
Monedas's picture

Just remember what you taught us, Zilverreiger .... Fascism and Socialism are the extreme, theoretical ends of the political/economic rectum spectrum universe .... everything else is Mr. In Between !

Wed, 01/02/2013 - 09:37 | 3114505 Sheeple Shepard
Sheeple Shepard's picture

They pay alright, but the length of time between when they say they're going to pay and they actually pay seems to in somewhat of a bull market.

Wed, 01/02/2013 - 21:50 | 3117254 thisandthat
thisandthat's picture

Problem is, by the time they're willing to pay, businesses might have been put out of business due to shortage of cash, if not even been dragged to courts for missing tax deadlines (due to shortage of cash), when they're owed more money, for longer, by state, than they owe the same state, in taxes...

Wed, 01/02/2013 - 09:31 | 3114496 Frastric
Frastric's picture

You are NEVER in debt if you don't have to pay anything back.

Repeat after me...


Now, what global debt crisis?


Wed, 01/02/2013 - 09:31 | 3114497 Kina
Kina's picture

Stock markets are rallying because old Wylie Coyote gets to take a few more air-steps.

Wed, 01/02/2013 - 09:38 | 3114507 youngman
youngman's picture

You know if the Government was not paying you think I might adjust my tax reports to get my money that way....

Wed, 01/02/2013 - 09:44 | 3114520 Monedas
Monedas's picture

"It's a good thing I wasn't born a girl .... or my mother would have to confess to her bridge circle .... that her daughter was a whore !" .... Berlusconi 

Wed, 01/02/2013 - 09:48 | 3114524 AgAu_man
AgAu_man's picture

Zee CB dominos must not fall!  Everyvun from a Euro cirkle, and vee all cirkle zee fiscal drain togezer, ja!?

Wed, 01/02/2013 - 09:52 | 3114538 Sheeple Shepard
Sheeple Shepard's picture

Nein danke, bekomme ich seekrank und Hass Hand in Hand mit Fremden.

Wed, 01/02/2013 - 09:52 | 3114539 urbanelf
urbanelf's picture

Looks like Greece just got... greecier?

Wed, 01/02/2013 - 09:53 | 3114541 Orémus
Orémus's picture

Banks can corrupt governments to increase the debt but they cannot make them enslave their people fast enough

Wed, 01/02/2013 - 10:11 | 3114587 monopoly
monopoly's picture

This is so surreal. But, exactly why you cannot short this market except for a few hours or a couple of days. They will be suffering pain and most of their gains of the last few days....Poof! And nothing is solved. Beyond words.

Wed, 01/02/2013 - 10:21 | 3114623 mm17101978
mm17101978's picture

Actually here in Italy there are private companies still waiting for the government to pay some invoices sent out in 2002! The wait here is far more than 80, 85 or 90 days on average. I believe nobody pays before, in the best case, before 6 or 12 months from the date the invoice is sent to the damn politicians. By far the worst country in Europe, with the lowest wages and with more to do to catch up to the others even when it comes to infrastructures (like the 4G/LTE comunication networks for example).

Wed, 01/02/2013 - 10:41 | 3114667 tango
tango's picture

My niece was hired by the Italian state to teach English as a 2nd language.  So she and new husband move to Rome only to be told that SHE has to find the job and the benefits promised have alas disappeared - Italy can no longer afford such luxuries anymore.   Her daddy (my brother / wealthy) is giving them a six month vacation instead of a down payment on a home. She wrote, "People are selling EVERYTHING they have!"  LOL   Good luck, you are going to need it.

Wed, 01/02/2013 - 10:30 | 3114650 Toolshed
Toolshed's picture

With all due respect, take the "word on the street" and combine it with $1 and you have...........$1. Just sayin'.

Wed, 01/02/2013 - 11:12 | 3114786 NEOSERF
NEOSERF's picture

Paying bills is so last millenium...plastic comes around as being the suggestion to Dustin Hoffman again in 2013 as being the best industry to be in for young people.

Wed, 01/02/2013 - 11:47 | 3114896 Element
Element's picture

Bills that can not be paid, will not be paid.

Wed, 01/02/2013 - 12:39 | 3115011 DaveA
DaveA's picture

Luckily those last three countries don't have blizzards. When Washington DC has one, private snowplow operators wait months to get paid. Finally in one major blizzard, they just stayed home, paralyzing the city for weeks.

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