In Italy, 1000 Companies Go "Belly Up" Each Day

Tyler Durden's picture


Since a government austerity plan intended to reduce the risk of a debt crisis and ensure the backing of the ECB took hold last year, Italy's economy has tumbled into one of worst recessions of any euro zone country, and as NY Times reports, among Italy’s estimated six  million companies, businesses of all sizes have been going belly up at the rate of 1,000 a day over the  last year, especially among the small and midsize companies that  represent the backbone of Italy's shrinking economy. With policy "paralysis" now more likely following the recent inconclusive elections, Ken Rogoff warns, "this underscores the likelihood of Italy having a Japan-like decade with phenomenally slow growth," and adds that this raises concerns over "the long-run stability of  growth in the euro zone over all."  Italy’s longstanding problems have grown worse in the last year as tax increases and spending cuts were pressed by Mr. Monti. 50% of small companies - ones with fewer than 50 workers, which constitute the vast majority of Italy’s economy and long provided much of its vitality, that are buckling as banks halt lending and taxes rise - unable to pay their employees on time. With the European Union standing as America's largest trading partner, problems that plague Europe's economy will be felt across the Atlantic.


Via The NY Times,

Since a government austerity plan designed to shield Italy from  Europe’s debt crisis took hold last year, the economy has tumbled  into one of worst recessions of any euro zone country, and Mr.  Tedeschi’s orders have all but dried up.  His company, Temeca, is still in business. For now.


But among Italy’s estimated six  million companies, businesses of all  sizes have been going belly up at the rate of 1,000 a day over the  last year, especially among the small and midsize companies that  represent the backbone of Italy’s 1.5 trillion euro, or $2 trillion, economy.


The situation has become more urgent after inconclusive elections  in February that left politics in Rome gridlocked. "With no one  governing the country, there will be more paralysis, so things will get worse,"




"This underscores the likelihood of Italy having a Japan-like decade  with phenomenally slow growth," said Kenneth S. Rogoff,  a professor  at Harvard University and former chief economist of the International Monetary Fund. "And it raises painful questions about the long-run stability of  growth in the euro zone over all."


And with the European Union standing as America’s largest trading  partner, problems that plague Europe’s economy are felt across the Atlantic.




One in two small companies cannot pay its employees on time, according to CGIA di Mestre, a research institute. With layoffs surging, unemployment rose to 11.7 percent in January. Youth unemployment has jumped to 38.7 percent.


The austerity program was intended to reduce the risk of a debt crisis and ensure the backing of the European Central Bank, but instead it left the country with no growth. And without growth, Italy will have a harder time paying down its 2 trillion euros ($2.6 trillion) in debt, one of the largest debt burdens in the euro zone.




But it is businesses ... - ones with fewer than 50 workers, which constitute the vast majority of Italy’s economy and long provided much of its vitality - that are buckling as banks halt lending and taxes rise. Credit issued by Italian banks fell in 2012 to the lowest level in more than a decade. And the government owes an estimated 70 billion euros in unpaid bills for goods and services to Italian companies.




In one and a half years, everything changed,” Mr. Tedeschi said. “People started feeling afraid, and they stopped spending money. All the promises Monti made to relaunch the economy and help us enhance productivity never materialized.”




“When I had to fire those people, I cried,” he said, ...


“This is a moment where if you stay alone in this situation,” he said, “you will wind up by shooting yourself.”


Mr. Tedeschi’s wife said the family stopped drawing salaries more than a year ago to make payroll for the remaining workers. Disillusioned with the economy’s rapid erosion under Mr. Monti, the family voted for the anti-establishment Five Star movement, led by the comedian turned activist Beppe Grillo, in the February elections, even though they knew it might lead to chaos.


“It’s a form of protest,” Lorenzo Tedeschi said, adding that he had been drawn by Mr. Grillo’s plan to cut billions of euros in corruption and wasteful spending. “We need to start from scratch in this country, and he gives us hope that there is a chance to make things equal.




Ms. Tedeschi put her hand on her husband’s shoulder. “We are going through a financial war, which is burying us,” she said. “Will there be any survivors?”

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Tue, 03/12/2013 - 11:26 | 3322484 Rustysilver
Rustysilver's picture

How many owners drive Lamborghini?

Tue, 03/12/2013 - 11:30 | 3322493 Say What Again
Say What Again's picture

Just like in the US, all that money getting pumped in to the big banks, and none of it going to the small businesses in the way of low interest loans.  The banks just get bigger reserves with which to rehypothecate stuff.

Tue, 03/12/2013 - 11:31 | 3322504 AssFire
AssFire's picture

Going Gaulto.

Tue, 03/12/2013 - 11:37 | 3322532 NotApplicable
NotApplicable's picture

Well, at least Ms. Tedeschi recognizes they are casualties of war. Meanwhile, the NYT further promotes it by claiming that the things are being done to prevent a debt crisis.

Tue, 03/12/2013 - 12:01 | 3322644 Chupacabra-322
Chupacabra-322's picture

Yep.  Compartmantilized/Centralized Intelligence form of Fascist Authoritative Global Criminal Cabal Crime Syndicate economic system stolen and streamlined to benefit the Oligarch Criminal Elite.  Welcome to servitude or a boot in your face. 

Tue, 03/12/2013 - 12:48 | 3322825 WillyGroper
WillyGroper's picture

TPP - We're hosed, globally.

Tue, 03/12/2013 - 11:26 | 3322486 Abraxas
Abraxas's picture

Never go against the family, Michael.

Tue, 03/12/2013 - 11:48 | 3322578 aleph0
aleph0's picture


I remember some 6 years ago, an Italian fishing village refused the Govts. mandatory Pension scam/scheme, and said the local Mafia's scheme is far better and has functioned successfully for decades .

Around about the same time  , Berlusconi's FinMin asked Brussels for a "holiday from the Euro" ... refused point blank.
A few months later, Spain asked Brussels to be allowed to  introduce a 2-Euro "note"  ... refused point blank.



Tue, 03/12/2013 - 13:49 | 3322502 Kreditanstalt
Kreditanstalt's picture

"Since a government austerity plan intended to reduce the risk of a debt crisis and ensure the backing of the ECB took hold last year, Italy's economy has tumbled into one of worst recessions of any euro zone country."

It sounds like this guy is trying desperately to place blame for the private sector "economic crisis" on government austerity.

Government overspending and insolvency are SYMPTOMS of - or wasteful responses to - economic troubles, not causes. 

Tue, 03/12/2013 - 19:24 | 3324245 bilejones
bilejones's picture

Well done.

Good satire is a rare thing nowadays.

Tue, 03/12/2013 - 11:31 | 3322505 ceilidh_trail
ceilidh_trail's picture

The common theme world over is tbtf/tbtj bank bailouts. Gee, why can't anybody figure out a solution?

Tue, 03/12/2013 - 11:32 | 3322507 falak pema
falak pema's picture

welcome to the NWO of first world slimming...too much fat not enuff muscle...time for a good purge. 

If you want your jobs back you have to think "grapes of wrath" : "you work for 2.5 cents/crate of peaches 'cos if you don't they're plenty out there to do your job. We have 7 billon to pick from, so now move along."

Vai, Vai, subito vai!  

Tue, 03/12/2013 - 11:32 | 3322508 DoChenRollingBearing
DoChenRollingBearing's picture

Which is really sad, because I feel such affection for Italy.  Such good food, such open people.  But their .gov always screws them.

Italy is such a large country (in Europe) that this WILL spread and it will become very ugly all over Europe soon.

And then it will be our (America´s) turn...

Tue, 03/12/2013 - 12:24 | 3322731 ElvisDog
ElvisDog's picture

I disagree. The U.S. will be the last man standing, and as long as one or more of the major powers (Europe, China, Japan) is experiencing economic contraction the perceived "safe haven" quality of the U.S. will keep the U.S. ponzi going. Look at the world right now - Europe and Japan are basket cases. China is teetering on the edge. Conclusion: the U.S. will keep plodding along.

The flip side of this premise is that if Europe, Japan, and China were well-run and humming along, the U.S. crisis would have already hit. But they're not, so it hasn't.

Tue, 03/12/2013 - 12:45 | 3322808 DoChenRollingBearing
DoChenRollingBearing's picture

Hey, could be!  Bearings don´t know much and are stressed all the time, because, you know, they have to carry a lot weight around and keep going and going...

Tue, 03/12/2013 - 11:34 | 3322514 lolmao500
lolmao500's picture

Soros and Buffet are happy, they can buy hundreds of those every day on the cheap!!

Tue, 03/12/2013 - 11:35 | 3322521 MoneyThangs
MoneyThangs's picture

Oh this is why were having a bloodbath of a sell off today- when there is so much fear it's time to buy. That time is now

Tue, 03/12/2013 - 11:35 | 3322524 Temporalist
Temporalist's picture

Have you seen all the little PIIGieS floating in the surf?

And for all the little PIIGieS life is getting worse.

Tue, 03/12/2013 - 11:39 | 3322541 poor fella
poor fella's picture

At some point, a country will have to go all-in on 'protectionism' and do what's best for its citizens (to keep their heads and property, not because it's right). 

It can't be much worse than this dogshit c-suite-takes-all system. The real collapse/reset will occur if no country ever reaches that point and the globalists are allowed to finish enslaving the rest of us or decide to discard the extra people the world doesn't need due to the miracle of robotics.

"Computer, a new suit, bring the car around, and poached eggs please."  -  "Would you like Soylent Sauce with that Dave?"

Tue, 03/12/2013 - 14:53 | 3323309 Cpl Hicks
Cpl Hicks's picture

Hold the sauce, HAL, and please open the pod bay doors!
I am outa here.

Tue, 03/12/2013 - 11:42 | 3322555 thewayitis
thewayitis's picture

   EUrope LOADED with canaries. Get the Gold gentlemen..... Nough said

Tue, 03/12/2013 - 11:48 | 3322579 Hedgetard55
Hedgetard55's picture

Italy really is two countries, North and South. 


Maybe the price of a bottle of Barolo will come back to earth?

Tue, 03/12/2013 - 13:06 | 3322887 Rustysilver
Rustysilver's picture


I also understand the reluctance of people to relocated to the north for jobs.  People just don't want to move away from the families. It may have changed but that's what I saw.

Tue, 03/12/2013 - 11:54 | 3322613 Sudden Debt
Sudden Debt's picture

it's happening all over europe. the numbers are 5 times higher than normal with the difference that new startups are also way lower.

Math is a bitch for a independent.

50 people, cost 150 euro each a day. You need to make 300 euro a day to cover the wages with a margin of 40%

it's a big number. Especially if you'r number are red for the last 6 months.

Tue, 03/12/2013 - 12:50 | 3322831 Non Passaran
Non Passaran's picture

18.7K x 40% = 50 x 150

Tue, 03/12/2013 - 11:58 | 3322625 Chupacabra-322
Chupacabra-322's picture

Ah, mamma mia!  I wonder if that plumming Co. Mario and Luigi own is still in business. 

Tue, 03/12/2013 - 12:09 | 3322676 JOYFUL
JOYFUL's picture

...With the European Union standing as America's largest trading partner, problems that plague Europe's economy will be felt across the Atlantic...

Umm, in the absence of either "Dr Paul Krugman" or MDB, I'll fill in here, cause you've, once again, with your adjoining piece on booming Italian luxury car exports, obviously set us up to draw the appropriate conclusions...

You doomer libertarian goldbugs never seem to're so busy  playing Henny Penny that the workings of modern capitalism rush right by you! So a few inefficient Italian factories go vacant...that's the way of the market! The government, in coordination with top flight economists and the the best of the financial sectors' brain trust is merely streamlining the Italian economy so as to best utilize it's labor force.

The key to success in modern productive economies is focus...why bother with thousands of small time outfits(that probably scame the tax authorities by paying with cash and fiddling their books!) when you can mobilize the whole country to work under the umbrella of a single, unified corporate entity, which streamlines the role of both state and industry...and gives everybody a piece of the pizza pie!

Just put everybody in the Italian labor force to work building  Lamborghini, and presto! Problem solved. It's really not that hard when you know what your doing! You greasy pencil necks should step back and let the pros do the thinking. That's what we're here for!

Tue, 03/12/2013 - 12:59 | 3322860 IridiumRebel
IridiumRebel's picture

Excellent supplanted argument for our most dubious and arrogant central planning mouthpieces! May you all receive Château Lafite Rothschild as a portion of your next bonus structure! Immigrant hookers for all!

Wed, 03/13/2013 - 04:09 | 3325201 Ghordius
Ghordius's picture

+1 MDB could not have wrote it better - the focus only megacorporations can give

btw, note the loss of 1'000 small companies versus the millions Italy has

Tue, 03/12/2013 - 12:19 | 3322717 ElvisDog
ElvisDog's picture

Growth? Growth? What fucking growth? Italy isn't going to have any real economic growth for as far as the eye can see. "Growth", "Recovery", "Expansion" utter complete bullshit.

Tue, 03/12/2013 - 13:19 | 3322944 Vince Clortho
Vince Clortho's picture

True.  The primary "growth" sector right now is wealth confiscation.

Tue, 03/12/2013 - 12:53 | 3322847 IridiumRebel
IridiumRebel's picture

...So about the same as Cleveland or Detroit....

Tue, 03/12/2013 - 13:17 | 3322932 Vince Clortho
Vince Clortho's picture

The big benefit of all these thousands of small businesses going belly up is that the slack and profits will now be taken up by the large corporations owned by the Central Planners.

We all know you cannot be the Supreme Ruler of Planet Earth if there is a robust Middle Class snatching a share of the business and wealth...

It may be more dramatic in Italy right now, but it is happening in all the developed countries.  The same script (with a few variations) is being used everywhere.

As Rockerfeller once mused, competition is a nuisance to the big guys.

Tue, 03/12/2013 - 13:19 | 3322946 SmittyinLA
SmittyinLA's picture

I'd "close" too, my guess is the rest of Italian economy is joining the rest of the "underground economy", nobody wants to be the "last private sector employer" claiming to be working in a Socialist state, you end up carrying everybody including Albanians & Africans, fuck that. 

PSSST, I have a brand new Ferrari that just fell off o truck, interested in an all cash deal? 

Tue, 03/12/2013 - 13:24 | 3322957 BinAround
BinAround's picture

Italy has 60mln citizens, perhaps 39mln of working age, if 75% participate, that's only 30mln workers.

With 6 million companies?? 

The avg company has less than 5 employees?

I thought is was difficult to start a company in Italy?  guess not.





Tue, 03/12/2013 - 13:40 | 3323010 orangegeek
orangegeek's picture

1000 businesses a day going tits?


That sounds like a growing economy to me.  Buy more stocks. 


Liquidate everything you have and go long some fucking stocks.

Tue, 03/12/2013 - 22:22 | 3324712 Notarocketscientist
Notarocketscientist's picture

Bullish!    Bad = Good.  Good = Bad.  

If things keep getting so much 'better' the ECB will follow through with unlimited printing.

And the stock market will SOAR!!!

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