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The Italian Government Owes Over $100 Billion To Private Suppliers
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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Winning!
Brought to you by the New World Order
Reality has been suspended until further notice.
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.
When it gets seriouser, you have to lie.
If at first you do decieve; lie, lie again.
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]
Nice.
I think I see a nation that could use a loan from the new BRICS bank.
Why doesn't the Italian government just issue script to them like the California state government once did?
"whatever it takes" <--oldie but goodie
Sometimes, it's better just to default. Bitchez.
Obama ,
We are sick of your LIES
Regards ,
Middle Class
Cheap tactic and totally violates FASB....oh wait
"Oh, what a tangled web we weave
when first we practise to deceive. "
Walter Scott
Wow, who would think the Italian government would be a disaster?
Wow, who would think government would be a disaster?
FIFY
"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!
Wait until you hear what Illinois has been doing in this regard. I don't think they have paid any vendors since 2011!
What are you talking about? Ex-Im bank will subsidize those losses.
Set the printers to ludicrous speed!
Drink up boys and girls. The Koolaid is aflowin.
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.
ZH invented a new word - growtn: Growing by not paying bills.
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.
If you like your gummermint IOUs, you can keep them.
We really mean it this time.
Here in the UK our economy is booming according to Mr Osborne! I call it a "borrowed recovery" as debt levels keep rising.
Uncle Scam will bail you out.
Oh wait....
I think Uncle Sam is the kind of uncle that wants to touch you inappropriately.
I think Uncle Sam is the kind of uncle that wants to touch you inappropriately.
For 50 years... or more.
My wallet is what he's touching.
Rising debt levels is growth.
So cancerous growth is bullish for GDP? Awesome! Hookers, blow and gov theft are all positive indicators.
css1971 didn't say it was good growth. Cancer is growth too, you know.
Yep. I understood.
$7 trillion debt = $1 nominal trillion GDP
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
"We will insure that the arrears are paid off by the end of the year". My ass!, hows that for an arrear?
Pasta will save the day! Who believed that their economy was in recovery? Perhaps the Muppets? Which bank well be the scapegoat?
And now you know the rest of the story. /Paul Harvey (RIP).
So I guess Italian 10y BTP will now go to 2% LOL
Are we sure he didn't say "the end of a year".
I will gladly pay...tuesday..hamburger..etc.
renege-a-roni
Or in 'Murika, we currently have re-nig-a-phony
re-nigga-is-a-phony when it comes to Obama!!! There fixed for you.
eh whatsa matter you? You no lika accounting? No you cry. Pizza pie for alla my friends!
How is the private sector allowing the public parasites to kill them everywhere ????
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
"Slow roasted" is a EU trademark, look at Portugal, Greece, Cyprus and the likes.
That which cannot be paid, won't be! Lend (to the government and large banks) accordingly.
"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/
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.
i was thinking the same, but ...
... i'm also sure italian banks are more than willing to help. for no particular reason, of course.
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.
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
More like taking it Greek.
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.
looks like the italians will be learning german too - much like the french will
"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.
Damn this one big circle jerk! Time to cue more meetings, plans for meetings, and to plan for a plan of meetings!
I think they decided "working group" sounds more productive than meeting.
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.
Tyler, this is plain, hard-core reporting. Where's that superb sarcasm of yours that turns unsavory facts into digestible tidbits?
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 ?
"Italy is finding it hard to pay bills since it is broke"
Fixed it!
"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.
Ay Oh, turn-a on-a da printin-a press-a!
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.
Ah, Italian government finally exercises that right of kings... To tell their subjects to go fuck themselves.
Pastanomics 101
More like Meatsa Ball 39 cents;)
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.
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.
"The problem with socialism is that eventually you run out of other people's money."
-Margaret Thatcher
Payment terms - PIF 30 days or less. After 30 days deduct 50%. Hahhahahha
Print 100 billion Euros.
Pay off suppliers.
Profit.
We had more fun during the days of the bunga bunga. Bring back the bunga.
Well, we are still waaaay ahead at 17T! Yay!
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 • KURT ERICKSON H&R Springfield Bureau Chief http://bloximages.chicago2.vip.townnews.com/herald-review.com/content/tn...) -128px -96px;"> (0) CommentsSPRINGFIELD -- 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...."
How does this compare to what Chicago, Illinois, Detroit, etc owe vendors?
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.)
The Illinois plan
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.
Ah see. This why they need sex and drugs.
All that is missing is the rock and roll. Super Mario is working on that.
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.
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.
Can anyone in this world do anything without borrowing for crying out loud?
What? And cut out the banks?
Apologies, I'll go wash my mouth out with soap.
You work for government? Blame yourself
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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...
Italian slaves are getting more expensive by the day.
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.
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
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.
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
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!!
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"
FTSEMIB rallies obviously
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.
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.
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.