The Italian Government Owes Over $100 Billion To Private Suppliers

Tyler Durden's picture


Much has been said in the popular press about Italy's surprising economic recovery (which based on recent data is starting to lose steam), as well as its much improved fiscal picture (even if the country's public debt hits record highs quarter after quarter and the bad debt within its banking system just rose by 24% from the prior year, to €169 billion the highest since 1998). Little has been said about just how Italy managed to pull this economic miracle off. The answer: robbing private suppliers to pay Paul, or rather, the public sector.

According to Reuters, the Italian state owes some 75 billion euros ($102 billion)to private suppliers, as reported by the Bank of Italy. The unpaid bills have starved companies of cash and triggered layoffs, factory closures and bankruptcies.

Italy will settle the debt arrears it owes to private sector suppliers by the end of this year, Economy Minister Pier Carlo Padoan said in a newspaper interview on Sunday, pushing back previous commitments. "We will ensure that the arrears are paid off by the end of the year," Padoan told Corriere della Sera daily.

That's funny, because back in March, PM Renzi promised all debt would be paid back by, well, right now. One week later, he said September. We look forward to September to learn that not only will the debt not be paid back by the end of the year, but the total amount of money due to the private sector from the government has in fact, growtn.

Remember when they said Italy is undergoing an unprecedented economic recovery? They lied:

The government is finding it hard to tackle the problem because of public finance constraints, inefficiency, uncertainty over exactly how much is owed and a reluctance on the part of some public bodies to acknowledge their debts.


In June, the European Commission opened a formal infringement procedure against Italy because of its failure to comply with the Late Payments Directive, which orders governments to reduce payment delays to no more than 60 days.

Well, yes: if one starves the private sector to pretend that the public one is doing ok, that works. For a few months. Then everyone remembers that aside from the Europe's epic ECB-sponsored Ponzi scheme where bond yields no longer reflect anything at all, a properly functioning economy starts always and only from the private sector. Sadly, in this case it is the cancer that is Italy's corrupt government that will certainly be the reason for what is already shaping up as a triple dip recession. We give it 6-9 months.

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Sun, 07/27/2014 - 18:15 | 5010687 kaiserhoff
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  Brought to you by the New World Order

Sun, 07/27/2014 - 18:24 | 5010710 CH1
CH1's picture

Reality has been suspended until further notice.

Sun, 07/27/2014 - 18:39 | 5010753 Winston Churchill
Winston Churchill's picture

TPTB have welded the relief valve closed, while piling  coal into

the boiler.The gauge has been solidly in the red since 2008, and the sell

side pundits keep telling us to gather around it to keep warm.

It will be different this time,thats for sure.

Sun, 07/27/2014 - 18:40 | 5010755 Manthong
Manthong's picture

When it gets seriouser, you have to lie.

If at first you do decieve; lie, lie again. 

Sun, 07/27/2014 - 19:26 | 5010822 Pool Shark
Pool Shark's picture




Just saw this link on Denninger's site:

Bloomberg is reporting that video has surfaced showing Jonathan Gruber; one of the chief architects of portions of ObamaCare, claiming that there would be no tax subsidies in states that don't set up healthcare exchanges. Gruber (on at least two occasions) admitted that the purpose of the provision was to coerce states into either setting up exchanges or facing the wrath of their angry citizens!

This should blow the administration out of the water if Halbig vs. Burwell gets to the Supreme Court!

The administration has consistently taken the position that this was a 'drafting error.' BULSHIT!!! It was intentionally drafted that way!


[Here's the video on Youtube; relevant passage begins around minute 31:]

[And here's the second recording of Gruber AGAIN admitting there would be no tax subsidies in states without exchanges:]

[Here's the specific clip:]


Sun, 07/27/2014 - 19:49 | 5010928 JLee2027
JLee2027's picture


Sun, 07/27/2014 - 19:56 | 5010951 tmosley
tmosley's picture

I think I see a nation that could use a loan from the new BRICS bank.

Sun, 07/27/2014 - 20:24 | 5011040 0b1knob
0b1knob's picture

Why doesn't the Italian government just issue script to them like the California state government once did?

Sun, 07/27/2014 - 22:07 | 5011270 Four chan
Four chan's picture

"whatever it takes" <--oldie but goodie

Mon, 07/28/2014 - 01:36 | 5011661 Drunk In Church
Drunk In Church's picture

Sometimes, it's better just to default.  Bitchez.

Sun, 07/27/2014 - 19:56 | 5010956 Remington IV
Remington IV's picture

Obama , 


We are sick of your LIES

Regards ,

Middle Class  

Sun, 07/27/2014 - 19:05 | 5010832 max2205
max2205's picture

Cheap tactic and totally violates FASB....oh wait

Sun, 07/27/2014 - 19:19 | 5010859 TheSecondLaw
TheSecondLaw's picture



"Oh, what a tangled web we weave

when first we practise to deceive. "

                               Walter Scott

Sun, 07/27/2014 - 18:53 | 5010797 RafterManFMJ
RafterManFMJ's picture

Wow, who would think the Italian government would be a disaster?

Sun, 07/27/2014 - 20:36 | 5011062 logicalman
logicalman's picture

Wow, who would think government would be a disaster?


Sun, 07/27/2014 - 19:17 | 5010857 BlindMonkey
BlindMonkey's picture

"Reality has been suspended until further notice."

Along with vendor payments! W00t! Can't get enough of that vendor financed recovery. Hope they went ball to the wall with IT spending. Can't wait to see IBM, Cisco and Microsoft take it in the shorts. That should help knock the bottom out stocks when they realize the losses. Moar recovery!

Sun, 07/27/2014 - 19:51 | 5010936 chubbar
chubbar's picture

Wait until you hear what Illinois has been doing in this regard. I don't think they have paid any vendors since 2011!

Sun, 07/27/2014 - 22:07 | 5011273 XitSam
XitSam's picture

What are you talking about?  Ex-Im bank will subsidize those losses.

Set the printers to ludicrous speed!

Sun, 07/27/2014 - 20:54 | 5011109 Democratic koolaid
Democratic koolaid's picture

Drink up boys and girls. The Koolaid is aflowin.

Sun, 07/27/2014 - 21:26 | 5011176 jarana
jarana's picture

And payment from civil servants to producers of good and services that civil servants provide to the ones taxed on benefits earned producing these goods and services has been suspended too.

The intrinsical capitalism unstability has been empirically proven.

Sun, 07/27/2014 - 19:42 | 5010911 JLee2027
JLee2027's picture

ZH invented a new word - growtn: Growing by not paying bills.

Sun, 07/27/2014 - 19:59 | 5010960 Coke and Hookers
Coke and Hookers's picture

Instead of spending from the future and issuing paper pointing to sci-fi land the Government debt increase is moved into the present and to the private sector. A new source of growth has been found! I think the Italian Government should get the next econ nobel for inventing this fantastic growth engine.

Sun, 07/27/2014 - 18:34 | 5010690 sosoome
sosoome's picture

If you like your gummermint IOUs, you can keep them.

We really mean it this time.

Sun, 07/27/2014 - 18:18 | 5010694 maneco
maneco's picture

Here in the UK our economy is booming according to Mr Osborne! I call it a "borrowed recovery" as debt levels keep rising.

Sun, 07/27/2014 - 18:22 | 5010703 Winston Churchill
Winston Churchill's picture

Uncle Scam will bail you out.

Oh wait....

Sun, 07/27/2014 - 20:41 | 5011073 logicalman
logicalman's picture

I think Uncle Sam is the kind of uncle that wants to touch you inappropriately.


Sun, 07/27/2014 - 21:50 | 5011234 CH1
CH1's picture

I think Uncle Sam is the kind of uncle that wants to touch you inappropriately.

For 50 years... or more.

Sun, 07/27/2014 - 22:12 | 5011282 XitSam
XitSam's picture

My wallet is what he's touching.

Sun, 07/27/2014 - 19:00 | 5010819 css1971
css1971's picture

Rising debt levels is growth.

Sun, 07/27/2014 - 19:27 | 5010874 BlindMonkey
BlindMonkey's picture

So cancerous growth is bullish for GDP? Awesome! Hookers, blow and gov theft are all positive indicators.

Sun, 07/27/2014 - 19:39 | 5010907 bonin006
bonin006's picture

css1971 didn't say it was good growth. Cancer is growth too, you know.

Sun, 07/27/2014 - 19:47 | 5010921 BlindMonkey
BlindMonkey's picture

Yep. I understood.

Sun, 07/27/2014 - 19:59 | 5010963 Remington IV
Remington IV's picture

$7 trillion debt = $1 nominal trillion GDP

Mon, 07/28/2014 - 04:14 | 5011790 barre-de-rire
barre-de-rire's picture

the only way to keep goin indeed.


at a point of observation, debt for growth is the skyrocket point on the exponential curve representing the meadows report.

there is ony 1 indicator to trust, only 1 indicator to follow, only 1 that is the direct reflect of how deep in the hole we dive : price at the gaz station.


3 years max before SHTF

Sun, 07/27/2014 - 18:21 | 5010699 Last of the Mid...
Last of the Middle Class's picture

"We will insure that the arrears are paid off by the end of the year". My ass!, hows that for an arrear?


Sun, 07/27/2014 - 18:21 | 5010700 Ban KKiller
Ban KKiller's picture

Pasta will save the day! Who believed that their economy was in recovery? Perhaps the Muppets? Which bank well be the scapegoat?

Sun, 07/27/2014 - 18:25 | 5010713 BlueStreet
BlueStreet's picture

And now you know the rest of the story. /Paul Harvey (RIP).

Sun, 07/27/2014 - 18:27 | 5010720 jubber
jubber's picture

So I guess Italian 10y BTP will now go to 2% LOL

Sun, 07/27/2014 - 18:29 | 5010721 SpanishGoop
SpanishGoop's picture

Are we sure he didn't say "the end of a year".

I will gladly pay...tuesday..hamburger..etc.





Sun, 07/27/2014 - 18:31 | 5010729 world_debt_slave
world_debt_slave's picture


Sun, 07/27/2014 - 18:41 | 5010757 Colonel Klink
Colonel Klink's picture

Or in 'Murika, we currently have re-nig-a-phony

Sun, 07/27/2014 - 23:57 | 5011522 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

re-nigga-is-a-phony when it comes to Obama!!! There fixed for you.

Sun, 07/27/2014 - 18:32 | 5010731 foodstampbarry
foodstampbarry's picture

eh whatsa matter you? You no lika accounting? No you cry. Pizza pie for alla my friends!

Sun, 07/27/2014 - 18:35 | 5010740 Seasmoke
Seasmoke's picture

How is the private sector allowing the public parasites to kill them everywhere ????

Sun, 07/27/2014 - 18:38 | 5010748 Fuku Ben
Fuku Ben's picture

The BRICS Bank is proudly stepping forward to offer Italy their newest product the BBQ (BRICS Bank Qualified) loan

Don't get burned by the IMF get slow roasted perfection with a BBQ loan today. Available at your nearest BRICS branch. Member F*CK

Sun, 07/27/2014 - 18:41 | 5010761 SpanishGoop
SpanishGoop's picture

"Slow roasted" is a EU trademark, look at Portugal, Greece, Cyprus and the likes.



Sun, 07/27/2014 - 18:38 | 5010751 Colonel Klink
Colonel Klink's picture

That which cannot be paid, won't be!  Lend (to the government and large banks) accordingly.

Sun, 07/27/2014 - 18:40 | 5010758 goose fat
goose fat's picture

"The atrocities being committed in the Arab world, will sadly, continue, as more Arab nations will be embroiled in a series of conflicts. The time for the first of the assassinations I spoke to you about last February will take place shortly. The Arab World uprising will spark unrest indirectly in every corner of the world."


"It will start in Europe.

Your banking system will be the cause and Germany, once again, will be involved in this tragedy as it was on the last two occasions.

When it commences, much will be over saving the economy, and catastrophe will affect Greece, with much fallout in France.

The Middle East will also be involved with Israel and Iran at war and Syria will play a serious part in the downfall of Egypt."

Sun, 07/27/2014 - 18:41 | 5010760 falak pema
falak pema's picture

Well thats the problem of not having your own CB...Italy is stymied by ECB and Mutti. 

Renzi must be on a slim fast diet; what Italy does today, France does tomorrow. 

Sun, 07/27/2014 - 21:27 | 5011182 layman_please
layman_please's picture

i was thinking the same, but ...


... i'm also sure italian banks are more than willing to help. for no particular reason, of course.

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