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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
kaiserhoff's picture

Winning!

  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

 

 

WARNING: OFF TOPIC!!!

Just saw this link on Denninger's site:

http://www.bloombergview.com/articles/2014-07-25/obamacare-s-smoking-gun-fires-again

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!

SUCK IT OBAMA!!!!!

[Here's the video on Youtube; relevant passage begins around minute 31: http://www.youtube.com/watch?v=GtnEmPXEpr0]

[And here's the second recording of Gruber AGAIN admitting there would be no tax subsidies in states without exchanges: http://podcasts.jccsf.org/2012/01/jonathan-gruber/]

[Here's the specific clip: http://www.youtube.com/watch?v=LbMmWhfZyEI#t=20]

 

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

Nice.

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?

FIFY

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

renege-a-roni

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."

 

http://www.thewarningsecondcoming.com/arab-uprising-spark-global-unrest-...

 

"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." 

http://www.thewarningsecondcoming.com/second-seal-world-war-3/

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.

Sun, 07/27/2014 - 18:46 | 5010765 Peter Pan
Peter Pan's picture

Greece is not only doing the same thing but is also forcing service providers to declare the income and pay tax as well even though the supplier has not received the income. Now that's what I call double whipping.

Sun, 07/27/2014 - 19:14 | 5010805 QQQBall
QQQBall's picture

Double whipping. hahahhaa - shitizens pay taxes on salaries they are owed and then the salaries are partially paid with the same tax monies paid - plus another tax bill of course. Gov't is not your buddy

Sun, 07/27/2014 - 18:55 | 5010806 Colonel Klink
Colonel Klink's picture

More like taking it Greek.

Sun, 07/27/2014 - 19:19 | 5010860 Winston Churchill
Winston Churchill's picture

At least when Cur Arnold Weinstock did that shit to me,paying once per

year ,he had the money.

You poor Italian suckers are sol.

When Greece did this , it was about 6 months before it imploded.

So many things coming to a head around Xmas, if we last that long.

Sun, 07/27/2014 - 18:44 | 5010767 orangegeek
orangegeek's picture

looks like the italians will be learning german too - much like the french will

Sun, 07/27/2014 - 18:45 | 5010769 smacker
smacker's picture

"The Italian Government Owes Over $100 Billion To Private Suppliers"

HA-HA-HA-HA-HA.

No problem, call up Berlusconi, $100 billion is 'walking around money' for him.

Sun, 07/27/2014 - 18:46 | 5010773 valley chick
valley chick's picture

Damn this one big circle jerk! Time to cue more meetings, plans for meetings, and to plan for a plan of meetings!

Mon, 07/28/2014 - 02:01 | 5011678 edotabin
edotabin's picture

I think they decided "working group" sounds more productive than meeting.

Sun, 07/27/2014 - 18:46 | 5010779 Notsobadwlad
Notsobadwlad's picture

Normal payment terms in Italy are 120 days plus ... so what is the Italian government's total spend? Maybe $100 billion is just normal.

If not, the ECB should just lend Italy a trillion or so at 0.25% interest like they do with Germany. Then there is no problem .. everyone go back to sleep.

It's not our fault that the ECB psychopaths are prejudiced against Italians.

Sun, 07/27/2014 - 18:46 | 5010781 dearth vader
dearth vader's picture

Tyler, this is plain, hard-core reporting. Where's that superb sarcasm of yours that turns unsavory facts into digestible tidbits?

Sun, 07/27/2014 - 19:06 | 5010795 BuddyEffed
BuddyEffed's picture

What I would like to know, is what is the equivalent Bail In they will use to try to cover this missing fiat?

Any suggestions readers ?

Sun, 07/27/2014 - 18:54 | 5010796 QQQBall
QQQBall's picture

"Italy is finding it hard to pay bills since it is broke"

 

Fixed it!

Sun, 07/27/2014 - 19:43 | 5010812 Colonel Klink
Colonel Klink's picture

"Italy is finding it hard to pay bills since dago broke"

FIFY with a little humor

EDIT:  And for the more PC types, give this squarehead kraut a break.

Sun, 07/27/2014 - 18:55 | 5010801 mastersnark
mastersnark's picture

Ay Oh, turn-a on-a da printin-a press-a!

Sun, 07/27/2014 - 18:55 | 5010804 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

After joining the European Union newscrews interviewed citizens of Italy who proceeded to proclaim that 'they would be the best' [meaning Italy] of the partners in the newly formed European Union. Clearly, Italy

has empirically demonstrated that 'they are the worst' aside from Greece. The Bible says there is 'pride before the fall' and Italy has demonstrated this beautifully. Contrary to popular belief Italians are not good money managers or even 'faux economists'. From the Vatican Bank to the economy of Italy we have a fascist state running towards

violence and ultimately war when they figure out their criminal empire is imploding world wide. Crime does not pay, Italy.

Sun, 07/27/2014 - 18:56 | 5010810 css1971
css1971's picture

Ah, Italian government finally exercises that right of kings... To tell their subjects to go fuck themselves.

Sun, 07/27/2014 - 19:03 | 5010830 williambanzai7
williambanzai7's picture

Pastanomics 101

Sun, 07/27/2014 - 19:44 | 5010917 kaiserhoff
kaiserhoff's picture

More like Meatsa Ball 39 cents;)

Sun, 07/27/2014 - 19:07 | 5010840 shovelhead
shovelhead's picture

I guess the private sector made the Govt. an offer that was easy to refuse.

It's kind of funny because the Italians in my childhood neighborhood never had a problem collecting money that was due.

At least not during their second visit.

Sun, 07/27/2014 - 19:42 | 5010912 Setarcos
Setarcos's picture

The trouble with the Thatcherite economy was that N Sea oil and gas would run out ... in fact that's the trouble with the whole neo-liberal-economic rationalist approach to "free markets" which never existed factually.

Economic illterates like Thatcher, Reagan and Keating in Australia were talking heads for the Banksters who have always parasited and ruined production and resources.

Don't believe me?  Look around, see resource wars breaking out everywhere, now that the experiment launched by the Chicago School is terminating.

Sun, 07/27/2014 - 19:15 | 5010855 Atomizer
Atomizer's picture

"The problem with socialism is that eventually you run out of other people's money."

-Margaret Thatcher

Sun, 07/27/2014 - 19:15 | 5010856 QQQBall
QQQBall's picture

Payment terms - PIF 30 days or less. After 30 days deduct 50%. Hahhahahha

Sun, 07/27/2014 - 19:23 | 5010868 robertocarlos
robertocarlos's picture

Print 100 billion Euros.

Pay off suppliers.

Profit.

Sun, 07/27/2014 - 19:34 | 5010893 q99x2
q99x2's picture

We had more fun during the days of the bunga bunga. Bring back the bunga.

Sun, 07/27/2014 - 20:20 | 5011024 billybobtx
billybobtx's picture

Well, we are still waaaay ahead at 17T! Yay!

Sun, 07/27/2014 - 20:19 | 5011027 ThirdCoastSurfer
ThirdCoastSurfer's picture

This is no different than what is going on all over. Illinois, for example, owes billions to it's suppliers as well with all the same repercussions: http://herald-review.com/news/state-and-regional/govt-and-politics/inter...

 

 

"March 13, 2014 12:00 am  •   http://bloximages.chicago2.vip.townnews.com/herald-review.com/content/tn...) -128px -96px;"> (0) Comments

SPRINGFIELD -- Illinois' giant stack of unpaid bills came with a hefty price tag last year.

According to a new report, taxpayers had to fork over $318 million in interest payments to vendors who weren't paid on time because of the state's precarious cash flow problems...."

Sun, 07/27/2014 - 20:33 | 5011053 FredFlintstone
FredFlintstone's picture

How does this compare to what Chicago, Illinois, Detroit, etc owe vendors?

Sun, 07/27/2014 - 20:37 | 5011068 Offthebeach
Offthebeach's picture

Nothing to worry until the Mafi....er..."government" orders massive amounts of shrimp, lobsters, high end booze and sells it out the back door.
You know, a bust out.

( Pisst, want some Marlboros? Come to my car trunk.)

Sun, 07/27/2014 - 20:45 | 5011081 natty light
natty light's picture

The Illinois plan

Sun, 07/27/2014 - 21:36 | 5011203 Proofreder
Proofreder's picture

So what !!

At this point, what does it matter ?

After all, what's a couple thousand million between friends, right?  Rope, lamp posts, and revolution is in the future, methinks.

Sun, 07/27/2014 - 22:44 | 5011355 Luckhasit
Luckhasit's picture

Ah see. This why they need sex and drugs.

All that is missing is the rock and roll.  Super Mario is working on that.

Sun, 07/27/2014 - 23:12 | 5011426 XC Skater
XC Skater's picture

I intend to buy property in Italy when the time is ripe. These kinds of reports give me hope their economy will crash out of the EU and property will be really cheap. Lots of Lires for my ounces.

Sun, 07/27/2014 - 23:40 | 5011492 NoWayJose
NoWayJose's picture

Anyone who thinks that the ECB controls the number of Euros just needs to read this article. I have no doubt that Italy is running their own printing presses to crank out fiat paper and to pay out electronic fiat. Big banks are not the only ones who can launder money and cook their books.

Mon, 07/28/2014 - 00:19 | 5011554 BringOnTheAsteroid
BringOnTheAsteroid's picture

Can anyone in this world do anything without borrowing for crying out loud?

Mon, 07/28/2014 - 02:03 | 5011682 edotabin
edotabin's picture

What? And cut out the banks?

Mon, 07/28/2014 - 03:04 | 5011725 BringOnTheAsteroid
BringOnTheAsteroid's picture

Apologies, I'll go wash my mouth out with soap.

Mon, 07/28/2014 - 01:47 | 5011667 GoldIsMoney
GoldIsMoney's picture

You work for government? Blame yourself

Mon, 07/28/2014 - 02:04 | 5011683 hwa-jurong
hwa-jurong's picture

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Mon, 07/28/2014 - 02:39 | 5011706 Atomizer
Atomizer's picture

Managing Director jewdong,

If you have computer problems this afternoon, press 1 for Spanish. 

Mon, 07/28/2014 - 04:19 | 5011802 highly debtful
highly debtful's picture

Good Day !!!

I am Highly Debtful !!! Given my name you will understand that your services are of great interest (no pun intended) to me !!!

But let me give you some great marketing advice !!! For free !!!

You haven't chosen your advertising medium quite carefully enough in this case !!!

What you're doing is a bit like selling bibles door-to-door in the vicinity of the Ka'aba during Hajj !!!

Mon, 07/28/2014 - 07:16 | 5011964 NinjaMonkeyFish
NinjaMonkeyFish's picture

Hi Mr. Jurong,

Few of my old pals, PMs of Spain, Portugal, Greece, and Italy, could sure use some of your loan capital right about now.

I will limit my commission percentage for providing you with this stunning idea to a mere 10 basis points of total funds disbursed.

Oh and in the case of default, feel free to bring in the Nigerian heavies ... I reckon those boys could do with a little learning about financial discipline, African gangsta-stylee.

NMF

Mon, 07/28/2014 - 03:32 | 5011750 Watson
Watson's picture

To keep Italy within the EUR-zone, Merkel will arrange that her taxpayers pay the USD 100Bil.

It would be surprising if the Italian authorities are not already contacting her about this - unlike Greece/Portugal (possibly Spain), a major failure in Italy is big enough to bring down the United States of Europe project.
And Merkel really believes in that project...

Mon, 07/28/2014 - 10:06 | 5012388 The Most Intere...
The Most Interesting Frog in the World's picture

Italian slaves are getting more expensive by the day.

Mon, 07/28/2014 - 03:37 | 5011756 supermaxedout
supermaxedout's picture

This article is bullshit.

You write: 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.

And what is the reality:  At least since 15 years private supliers had to wait appx 1.5 years till their bills were paid.  When I was starting to get involved with doing business in Italy that was the situation at least.   This was part of the deal when doing business with the Italian public entities. Every suplier knew this and therefore the price level for comparable goods and services was appx 30-40% higher when compared to Germany. In other words the long waiting period was already baked in the price.

Of course this is not a favourable situation for the government finances especially now when interest rates are so low.   So the Italinan government decided now (as it appears to me) to change this unfavourable situation and is soon going to start to pay on time.

This is going to trigger a reduction in prices under normal condition, because only when the governemt pays on time it has ths bargain power to bring its purchase prices down.  Only then a situation is established so that real competition can take place. 

My expectation is, that after some time when the new payment schedules are established,  then we will see that the  general price level for goods and services procured by the Italian public services and government organizations is going down.

That is what I call a real structural reform.  Bravo Italia.

Mon, 07/28/2014 - 04:29 | 5011812 jack59
jack59's picture

You shouldn't drink alchool early morning. First the government does not have money, second this new payment schedule has been on the government's agenda for ages but never implemented, third the majority of the companies suppling the government can do so based on the right connections, the barrier to entry are very strong and will not make anyone lower their prices.

Having said that let's wait and see, but I strongly doubt this time is different with Renzi the clown

Mon, 07/28/2014 - 11:58 | 5012958 supermaxedout
supermaxedout's picture

You are right when saying that without the right connections you can not become a succesful supplier for the government.  This kind of business is always personal but there is not always corruption involved.   

But a situation where a supplier has to wait many, many months till he gets payment (and is quietly accepting this fact by patiently waiting) is not tolerable.  Such a situation is the prerequisite for organized corruption and chaos on all levels. It is one of the roots for backroom deals.  Thats why it has to be changed.  Once the situation has changed it is possible to bring more light into the books and enables auditors to do their work. As it is now it is simply impossible. So its a start at least.

Mon, 07/28/2014 - 05:08 | 5011846 Ghordius
Ghordius's picture

supermaxedout, I agree with you. fact is that private suppliers to the Italian government had to wait way, way longer to get paid than 60 days. fact is that this lead to higher prices (the waiting time factored in). fact is that several Italian governments have worked to bring this down - this situation is old and actually getting better every year

of course neither Reuters nor others are interested to report the whole thing in context

Mon, 07/28/2014 - 04:13 | 5011791 jack59
jack59's picture

Besides the fact that the government does not pay his bills, forcing private companies to finance their production and the government, you are forced by fiscal laws to pay the VAT and taxes on profits even if you had not been paid. The folly of it is: you produce 100 Euro of goods with a cost of 80, you sell it to the government at 100+22 of VAT. You do not get paid and you are exposed for 100 euros, you pay taxes on 20, and you have to deposit 22 of VAT. With the marginal tax rate well over 50% your exposure grows to roughly 132 euros. 
Nice country to do business!! 

Mon, 07/28/2014 - 04:59 | 5011839 nathan1234
nathan1234's picture

Italian Govt to Mafia

"We could do with a loan of $100 billion from you".

Don of all the Mafias responds

"I think it's time we took over the Government too. You guys have been a pain in our culo for far too long"

Mon, 07/28/2014 - 05:33 | 5011879 jubber
jubber's picture

FTSEMIB rallies obviously

Mon, 07/28/2014 - 06:19 | 5011916 pashley1411
pashley1411's picture

The problem with waiting for government fiscal failure is that, by that time, like a drowning man, the government has taken down everyone else they can get their hands on.  

Mon, 07/28/2014 - 08:03 | 5012022 NEOSERF
NEOSERF's picture

So we need a new moniker for this twisted era of government that Central Banks have spawned...perhaps Deceitism or Vaporism, something that catches the essence of outright lying, being caught, nobody caring and markets moving higher.

Mon, 07/28/2014 - 09:57 | 5012354 Duude
Duude's picture

And you just know private enterprise isn't charging the government fines and interest for being in arrears like the gov of Italy would do to a taxpayer.

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