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"Time Is Running Out Fast" For Italy

Tyler Durden's picture




 

Everyone knows Europe is insolvent; the only question is "when" will Europe be forced to finally admit this truism. The long overdue house of cards may start toppling in as little as 6 months, as The Telegraph reports, Mediobanca's 'index of solvency risk' suggests "time is running out fast" for Italy. With the breakdown in Eurozone talks on a banking union and the Fed's shift in policy, Europe "has become a dangerous place," warns RBS. Unless Italy can count on low borrowing costs and a broad recovery, it will "inevitably end up in an EU bailout." The current situation is as bad as when the country was blown out of the ERM in 1992 as "the Italian macro situation has not improved...rather the contrary; with 160 large corporates in Italy now in special crisis administration." If the ECB doesn’t act, one analyst warns (pleads) it could see all the gains of the past nine months vanish in two weeks. Mediobanca said the trigger for a blow-up in Italy could be a bail-out crisis for Slovenia or an ugly turn of events in Argentina, which has close links to Italian business. "Argentina in particular worries us, as a new default seems likely."

 

Via The Telegraph,

“Time is running out fast,” said Mediobanca’s top analyst, Antonio Guglielmi, in a confidential client note. “The Italian macro situation has not improved over the last quarter, rather the contrary. Some 160 large corporates in Italy are now in special crisis administration.”

 

The report warned that Italy will “inevitably end up in an EU bail-out request” over the next six months, unless it can count on low borrowing costs and a broader recovery.

 

Emphasising the gravity of the situation, it compared the crisis with when the country was blown out of the Exchange Rate Mechanism in 1992 despite drastic austerity measures.

 

...

 

“The European Central Bank needs to take very aggressive steps to offset this,” said Marchel Alexandrovich from Jefferies Fixed Income. “We have a sell-off across the board. If the ECB doesn’t act, it could see all the gains of the past nine months vanish in two weeks, taking the eurozone back to square one.”

 

...

 

“We have clear signs in global finance of a generalised meltdown in assets right now.”

 

...

 

Mediobanca said the trigger for a blow-up in Italy could be a bail-out crisis for Slovenia or an ugly turn of events in Argentina, which has close links to Italian business. “Argentina in particular worries us, as a new default seems likely.”

 

Mr Guglielmi said Italy’s industrial output has slumped 25pc from its peak in the past decade, while disposable income has dropped 9pc and house sales have dropped to 1985 levels.

 

The 1992 crisis was defused by a large devaluation, allowing Italy to restore trade competitiveness at a stroke. Mediobanca said: “The euro straitjacket is clearly not providing a similar currency flexibility today. With the lira devaluation Italy managed to inflate debt away, which it cannot do today. It could take more than 10 years to revert to pre-crisis output levels.

 

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Tue, 06/25/2013 - 09:33 | 3690788 Bearwagon
Bearwagon's picture

If only time were already up ....

Tue, 06/25/2013 - 09:36 | 3690799 Croesus
Croesus's picture

OT, but Pfizer came out with some news today:

"Pfizer Corp. announced today that Viagra will soon be available in liquid form, and will be marketed by Pepsi Cola as a power beverage suitable for use as a mixer.

It will now be possible for a man to literally pour himself a stiff one. Obviously we can no longer call this a soft drink, and it gives new meaning to the names of “cocktails”, “highballs” and just a good old-fashioned “stiff drink”. Pepsi will market the new concoction by the name of: MOUNT & DO."

Tue, 06/25/2013 - 09:38 | 3690806 Bearwagon
Bearwagon's picture

"Okay - in that case, I'd rather have a drink of water."  ;-)

Tue, 06/25/2013 - 09:52 | 3690875 Oh regional Indian
Oh regional Indian's picture

Last time Italians burned shit, it was the il pasta riots.

This time I think it will be the il papas riots.

ori

Tue, 06/25/2013 - 10:04 | 3690911 ArgentoFisico
ArgentoFisico's picture

LA pasta!. PASTA IS FEMALE .... ah! what do i tell to you baluba-english-speaking ..

Tue, 06/25/2013 - 10:18 | 3690980 Oh regional Indian
Oh regional Indian's picture

Such passion for your pasta. Commendable.

Grazzi for the correction.

Viva La Pasta...

Amirite?

Tue, 06/25/2013 - 10:25 | 3691002 ArgentoFisico
ArgentoFisico's picture

We were all together in a point at the beginning of time, all very close to eachother, no space. Then Aunt Mary said "ooh! if we had some space i'd do a wonderful pasta for every one" ... and that moment it was the Big Bang, the universe was created  (Italo Calvino)

Tue, 06/25/2013 - 14:42 | 3691944 OliverTwist
OliverTwist's picture

Poi sarebbe "Grazie" .... :)

 

Tue, 06/25/2013 - 13:44 | 3691750 JeffB
JeffB's picture

I was just talking about this with my kids the other day. For all its idiosyncracies, myriad rules and many exceptions to those rules, at least English doesn't have genders randomly assigned to every noun, most of which should be genderless.

That's one thing that killed me with trying to learn German... having to memorize genders of all the nouns, most of which seemed to be assigned without ryhme or reason, many of which were counterintuitive.

Who came up with that silly idea? Did women design your languages or what?

 

Tue, 06/25/2013 - 09:44 | 3690817 Clueless Economist
Clueless Economist's picture

So, Graham Summers was right all along!

 

Tue, 06/25/2013 - 10:42 | 3691099 Bearwagon
Bearwagon's picture

That's "Graham SumNer" -  and he was dead wrong!

Tue, 06/25/2013 - 13:46 | 3691757 JeffB
JeffB's picture

So you did subscribe to his free reports?

Did you reciprocate by giving him a free subscription to the Times?

 

Tue, 06/25/2013 - 09:48 | 3690856 Wile-E-Coyote
Wile-E-Coyote's picture

Very Good. That did actually make me laugh out loud!!

Tue, 06/25/2013 - 09:49 | 3690862 Seasmoke
Seasmoke's picture

HI !!

Tue, 06/25/2013 - 10:07 | 3690920 lolmao500
lolmao500's picture

They should create female viagra and put it in the water...

Tue, 06/25/2013 - 09:38 | 3690809 Midasking
Midasking's picture

Forget about Europe "Number of Americans on Food Stamps is Bigger than the Population of Spain" http://tinyurl.com/mem7o7x

Tue, 06/25/2013 - 11:56 | 3691389 Non Passaran
Non Passaran's picture

How about "Number of Chinese who would qualify for food stamps by the US standards is larger than the population of the US"

Tue, 06/25/2013 - 11:17 | 3691234 Anasteus
Anasteus's picture

We haven't heard from Beppe Grillo for a long time... perhaps he has something to say.

It seems like he's waiting until the whole system rots away by itself and then he'll embrace the Italian politics with triumphal victory. Not a bad strategy.

Tue, 06/25/2013 - 11:40 | 3691331 Ghordius
Ghordius's picture

nope. he is more busy getting critizized by his "grillini". after all, they got elected, and he is not even eligible

btw, the Telegraph article is the usual refrain piece "break the EUR! break the EUR!" that they throw in from time to time

Brits have devalued and think it's the only way, period

painless, you see? ok, it's not painless for the many UK pensioners that live in the eurozone, but that's another story

Tue, 06/25/2013 - 09:36 | 3690803 Eireann go Brach
Eireann go Brach's picture

Send the dream team over there to begin tapering, Summers, Geitner and Corzine!

Tue, 06/25/2013 - 09:36 | 3690804 Dr. Engali
Dr. Engali's picture

Name for me one western nation that isn't insolvent. There aren't any. We just have something Italy doesn't have...the Bernank and a shit ton of tanks.

Tue, 06/25/2013 - 09:40 | 3690820 fonzannoon
fonzannoon's picture

Draghi reads from the same script. Italy's repression will continue unabated.

"Because of OMT, the euro area is a more stable and resilient place to invest in than it was a year ago.

Indeed, I would say that OMT is even more essential now as we see potential changes in the monetary policy stance with associated uncertainty in other jurisdictions of the integrated global economy."

Draghi

 

Tue, 06/25/2013 - 10:15 | 3690916 NoDebt
NoDebt's picture

Dead = Stable.  VERY stable.

Anyone hear whether Cyprus finally told the ECB/Euro to suck eggs?  No?  How very unsurprising.

In all honesty, I think the peripheral countries recognize they are INCAPABLE of governing themselves outside the Euro.  They just wouldn't know how to handle themselves any more with a free-floating currency and having to make their own decisions about things.  Certainly their politicians are not up to the task.  And that's really all that matters at this point.  Their subjects are just grist for the mill.

 

Tue, 06/25/2013 - 10:33 | 3691075 Panafrican Funk...
Panafrican Funktron Robot's picture

"Indeed, I would say that OMT is even more essential now as we see potential changes in the monetary policy stance with associated uncertainty in other jurisdictions of the integrated global economy."

Makes my brain hurt, trying to understand whether he actually had a point he was trying to make here, other than "OMT GOOD".

Tue, 06/25/2013 - 09:38 | 3690810 Debeachesand Je...
Debeachesand Jerseyshores's picture

Maybe the Vatican Bank could rescue the Italy,NaHHHHH.

Tue, 06/25/2013 - 09:42 | 3690828 Bearwagon
Bearwagon's picture

The last time that was tried, the Vatican Bankster was found dead hanging from a bridge near Victoria Embankment in London, which is a very interesting place at least:

http://www.zerohedge.com/news/2013-02-16/where-secret-jp-morgan-london-g...

Tue, 06/25/2013 - 09:39 | 3690813 USisCorrupt
USisCorrupt's picture

Minor problems, it will all work it way out. I hope it does not take 6 months to do so. I would rather see 6 days myself.

Tue, 06/25/2013 - 09:39 | 3690814 SheepDog-One
SheepDog-One's picture

Just quantitatively ease that shit man! Or bail it in!

I mean, DUH!

Tue, 06/25/2013 - 14:07 | 3691818 PTR
PTR's picture

I usually ease the shit with Ex-lax, but hey, whatever works.

Tue, 06/25/2013 - 09:40 | 3690818 Lewshine
Lewshine's picture

What a wonderful pop to lay into short, placing my bets against the central bankers of the world, and their ULTIMATE failure!!!

Tue, 06/25/2013 - 09:41 | 3690823 hampsterwheel
hampsterwheel's picture

....zzz....wake me when there is #1) an actual default, not just someone saying they default (as in Detroit) but when a large sum of money is actually withheld from a bank's or #2) When a Western politician is gunned down.... until then its more of the same - rinse wash repeat - Ctl+print - on a potemkin economy and an assault on any real assets....

Tue, 06/25/2013 - 09:44 | 3690833 Aurora Ex Machina
Aurora Ex Machina's picture

And Rolling Stone knifes Moodys (19th June, so a little late):

Thanks to a mountain of evidence gathered for a pair of major lawsuits by the San Diego-based law firm Robbins Geller Rudman & Dowd, documents that for the most part have never been seen by the general public, we now know that the nation's two top ratings companies, Moody's and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.

In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.

"Lord help our fucking scam . . . this has to be the stupidest place I have worked at," writes one Standard & Poor's executive. "As you know, I had difficulties explaining 'HOW' we got to those numbers since there is no science behind it," confesses a high-ranking S&P analyst. "If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value," complains another senior S&P man. "Let's hope we are all wealthy and retired by the time this house of card[s] falters," ruminates one more...

What happened to the ratings agencies during the financial crisis, and what is likely still happening within their walls, is a phenomenon as old as business itself. Given a choice between money and integrity, they took the money. Which wouldn't be quite so bad if they weren't in the integrity business.

[Rolling Stone]

 

Oh, and banks have a cunning plan how to fix this all.

Tue, 06/25/2013 - 10:12 | 3690939 SheepDog-One
SheepDog-One's picture

Yep, just rob the shit out of everyone one morning and run for the deep underground military bunker!

Tue, 06/25/2013 - 10:14 | 3690961 Fish Gone Bad
Fish Gone Bad's picture

Unfortunately, integrity is often for sale.

Tue, 06/25/2013 - 10:20 | 3690992 Uchtdorf
Uchtdorf's picture

The author of that article is going to end up driving his Mercedes at high speed into a tree.

Tue, 06/25/2013 - 09:46 | 3690842 justamousesquared
justamousesquared's picture

Oh, time is always running out. Always on the brink of one collapse after another. Just more fear mongering.

At the eleventh hour everyone blinks and the problem is resolved until the next crisis.

When it happens it will happen, no one will realise that it is the start if will just happen. Some broker some place panics sending some ripple through the markets and before you know it that's it switch off the lights and lets all go home.

The juggernaut won't just be allowed to crash, it will just one day out of the blue some event which no one will foresee like a rabbit running across the road, something small like that will cause the juggernaut to crash.

 

Tue, 06/25/2013 - 09:55 | 3690883 fonzannoon
fonzannoon's picture

So true.

2 years ago yields were blowing out all over Europe. It was all over. The end. Then they went on summer vacation and ever since then yields droped.

4 months ago Japan's bond market blew out. The currency started imploding. Kyle bass was right. It was all over. The end. Now their bond market qietly rallies and their equity markets stabilized.

2 months ago our bond market started cracking. Rates spiked up. The end is near. It's all over......

Tue, 06/25/2013 - 10:16 | 3690972 Fish Gone Bad
Fish Gone Bad's picture

There is money to be made in the state of fear.

Tue, 06/25/2013 - 10:36 | 3691089 fonzannoon
fonzannoon's picture

especially a fake one.

Tue, 06/25/2013 - 10:36 | 3691090 Panafrican Funk...
Panafrican Funktron Robot's picture

I'm with you there, another "Waddell and Reed" May 2010 flash crash could happen really anytime, for no apparent reason.  

Tue, 06/25/2013 - 09:47 | 3690847 yogibear
yogibear's picture

Central banksters only know how to push more credit and borrowing to expand. The world is saturated with debt/liabilities.

The bubble is huge. It's about time for it to burst.

Tue, 06/25/2013 - 09:50 | 3690864 ebworthen
ebworthen's picture

"The long overdue house of cards may start toppling in as little as 6 months..."

Can't be too soon.  I'm starting to envision watching the collapse at the Retirement Home.

Tue, 06/25/2013 - 09:50 | 3690865 teahouse
teahouse's picture

ALREADY SAID... SAYING AGAIN... EURO TO COLLAPSE BY YEAR END

Tue, 06/25/2013 - 09:56 | 3690888 yogibear
yogibear's picture

The lies are getting old. The PhDs in Keynesian economics are at the end of their boiled ropes. 

Tue, 06/25/2013 - 11:43 | 3691337 Ghordius
Ghordius's picture

last time (a few days ago) you wrote in one year, now you shortening to half a year? any reason for your change in forecast?

Tue, 06/25/2013 - 12:42 | 3691544 Kirk2NCC1701
Kirk2NCC1701's picture

Suppose that actually happens.  Then what, who benefits?  What's that do for the USD?

If this helps the USD, then the Fed will kill & bury the Euro, to save itself.

Tue, 06/25/2013 - 09:55 | 3690886 Jason T
Jason T's picture

Aug 7th .. Armstrongs computer puts as turning point.. Semptember, fireworks in Euroland. 

Tue, 06/25/2013 - 09:56 | 3690887 aleph0
aleph0's picture

Now how did I know this was from    !

Still ... he's right ... but he still has no idea how long  bEUrocrats can continue to lie.

Tue, 06/25/2013 - 10:13 | 3690952 Widowmaker
Widowmaker's picture

Isn't RBS the bank of terrorists?

FUCK YES IT IS!

Tue, 06/25/2013 - 12:44 | 3691552 Kirk2NCC1701
Kirk2NCC1701's picture

You mean Al CYA uses it as an offshoar bank?  Those terra rists?

Tue, 06/25/2013 - 10:14 | 3690960 TrustbutVerify
TrustbutVerify's picture

Isn't it interesting that what would be a shocking development (an EU bail-out) is today just a run-of-the-mill consideration.  It is an indication of complacency in regard to our tenous position - worldwide.  

Tue, 06/25/2013 - 10:15 | 3690970 Smuckers
Smuckers's picture

Puzzling.

Tue, 06/25/2013 - 10:24 | 3691015 youngman
youngman's picture

They will keep it going/quiet until after the German elections...then it will be back to weekly news and meetings again....headlines and good food...big meetings with lots of pictures and interviews with speeches saying all is fixed again...

Tue, 06/25/2013 - 10:36 | 3691066 TrumpXVI
TrumpXVI's picture

"...generalized meltdown in assets..."

What an upside down world.

If I'm understanding this correctly what he's talkin' 'bout is assets, or LOANS, going bad.  How did any sane definition of "assets" ever get to the point where this term referred to some deadbeat's bad debts?

 

And of course, gold still can't get a bid.

Tue, 06/25/2013 - 11:59 | 3691400 Non Passaran
Non Passaran's picture

If I got an oz of gold every time I thought "that's it" in the past 4 years....

This is getting too depressing!
Pleeeeze make them stop! Can we have at least some small African country go bust this year?

Tue, 06/25/2013 - 12:05 | 3691414 Croesus
Croesus's picture

@ Non Passaran:

Wait until around Thanksgiving-Christmas: 

http://jutiagroup.com/20130624-ben-bernankes-real-message-for-gold-inves...

They're barely holding the show together now.....and it's only going to get worse.

Patience and Tenacity are 2 good qualities to have. Holding PM's for any length of time requires both.

Tue, 06/25/2013 - 19:46 | 3691495 Sauerkraut-Opinion
Sauerkraut-Opinion's picture

"Everyone knows Europe is insolvent"

...Europe isn't just PIIGS. And PIIGS- luxury continues, e. g. Slovenia: Pensionable-age 56/57 - no intentions to wave it.

The reason: Governments are gambling, the game is called: "Who pays my voters bills next? My neighbor to the left or my neighbor to the right?"

Or as Spanish Professor Santiago Carbo - interviewed by "El Pais" in May 2010 - already explained: "Who saves money today gonna pay for his neighbors tomorrow".

People in Italy have privat assets, still doing vacation in Sardinia in August - their governments have a lot of savings potential. They finally have more money than their fanciless for everything responsible history overfreighted savers. As I told: It's poker.

Tue, 06/25/2013 - 13:39 | 3691733 DonGenaro
DonGenaro's picture

Well I told you once and I told you twice
That someone will have to pay the price

Jagger / Richards

Tue, 06/25/2013 - 15:12 | 3692078 falak pema
falak pema's picture

if time is running out fast for italy its running out fast for rogue capitalism at large; the cobweb.

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