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ECB Issues Ultimatum To Italy, Threatens To Halt Bond Purchases

Tyler Durden's picture




 

Three months ago, in exchange for the ECB's expansion of its sterilized monetizations of bonds to include Italian BTPs, allegedly the only backstop that has prevented Italian bonds from experiencing an all out collapse to date, Italy was presented with a list of strict "austerity" demands, among which were spending cuts, higher revenues and labor reform. Since then none of these has occurred... or will occur, simply because Berlusconi has no control over the government, yet neither does anyone else, although everyone in the local government enjoys having a scapegoat for the total chaos. It appears that the ECB has just made it clear that the status quo is about to end, unless Italy does in fact push with something. And unlike other cases, where politicians on both sides of the table are happy to spout rhetoric while knowing well that nothing will change, in this case, courtesy of Italy largely untenable debt profile in which €166 billion in debt and interest are due in 2012, the ECB will have no choice but to play hard ball. Reuters has just confirmed that, reporting that  The European Central Bank often discusses the possibility ending the purchase of Italian government bonds if it concludes Italy is not adopting promised reforms, ECB Governing Council Member Yves Mersch said. "If we observe that our interventions are undermined by a lack of efforts by national governments then we have to pose ourselves the problem of the incentive effect," Mersch said according to extracts of an interview with Italian daily La Stampa to be published on Sunday. In other words on Monday the market will have to not only digest the implications of what the implications of the Greek vote of confidence are (last we checked G-Pap is still PM, and likely will be for quite a while), but also what happens now that the ECB has issued an ultimatum to Berlusconi to get his house in order. The problem is that he can't. Not without stepping down, that is. At that point the Italian pseudo stability that everyone has been taking for granted knowing full well it is nothing but an illusion, will fall and expose all the rot underneath. At that point we will truly see just how "hedged" all those Primary Dealers are, who have perfectly offsetting short positions to all their longs.

And here is what an ECB ultimatum sounds like:

Asked if this meant the ECB would stop buying Italy's bonds if it did not adopt reforms it has promised to the European Union, Mersch, who heads Luxembourg's central bank, replied:

 

"If the ECB board reaches the conclusion that the conditions that led it to take a dec

ision no longer exist, it is free to change that decision at any moment. We discuss this all the time."

 

Since the ECB resumed its bond buying programme (SMP) around three months ago it has purchased some 100 billion euros of government bonds, a majority of which are thought to be Italian BTPs.

 

Mersch said the ECB did not want to become a lender of last resort to help the euro zone solve its debt crisis and said it was concerned that its job could be made more difficult by governments that "don't meet their responsibilities."

And the punchline:

"Our job is not to remedy the errors of politicians," he said.

No, it is merely to issue long overdue "or else" statements. Yet since the EFSF is unable to raise even €3 billion EURs to fund the Irish bail out, we are fairly confident that the ECB will be purchasing Italian bonds for a loooong time, because Berlusconi has figured out all too well just who it is that has the Mutual Assured Destruction trump card, and who stands to lose the most if said Destruction is indeed Mutual.

As a reminder, here is what the Italian debt/interest repayment schedule looks like. Good luck.

 

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Sat, 11/05/2011 - 16:08 | 1849089 Mike2756
Mike2756's picture

Long only cme margin trade, eh? lol.

Sat, 11/05/2011 - 21:47 | 1849691 The Big Ching-aso
The Big Ching-aso's picture

Mama Mia thatsa no apizza pie!!!

Sun, 11/06/2011 - 07:21 | 1850181 Eurodollar
Eurodollar's picture

No, it is definately not. It is just another empty threat. The ECB will have very little choice. They will keep buying into the sunset. The alternative for them as they see it is likely to be worse. If worst comes to worst (again, as they see it) it could even threaten the existance of the ECB. Let the expert game theorists figure this one out. Should be very applicable.

Sun, 11/06/2011 - 00:14 | 1849878 Buck Johnson
Buck Johnson's picture

Can't raise a measley 3 billion for the ESFS and now they are saying we will stop buying italian bonds if they can't get their country in order, yea right.  They are figuring out that the US, Germany, France, Netherlands, Luxembourg etc..  Are afraid of anyone failing because if they do, it will be worse for them than Italy or Greece or Ireland.  Because from the way things are being done, we are very close to the end of the game and they know it.  How do you explain to most of the US investors or customers who use these financial institutions for trades that they can't get their money out of it.  Even though like MF, they by law shouldn't have mingled customer accounts with the companies. 

Sat, 11/05/2011 - 16:10 | 1849093 unky
unky's picture

News from Cannes,  German newspaper is full of articles that say that france, UK and US want German gold reserves as security for the Euro rescue:

 

http://www.focus.de/finanzen/news/staatsverschuldung/plaene-der-g20-in-c...

http://www.welt.de/wirtschaft/article13700369/Euro-Retter-schielen-auf-G...

http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/schuldenkris...

Sat, 11/05/2011 - 16:17 | 1849123 Silver Kiwi
Silver Kiwi's picture

why would the US want Germanies gold? It's a BR afterall...

Sat, 11/05/2011 - 16:23 | 1849141 TK7936
TK7936's picture

Not the US, the Banks. US President represents the Banks.

Sat, 11/05/2011 - 18:47 | 1849445 Raskolnikoff
Raskolnikoff's picture

you gotta love Barry for having the audacity to at least try to have his cake and eat it too. Let's see, gets in office with Wall Street money, tries to stay in office by organizing protests about Wall Street. Wall Streets have become pawns for the political establishment. Let's face it, the government has been calling the shots for the last five administrations. 

Sun, 11/06/2011 - 00:36 | 1849918 Bring the Gold
Bring the Gold's picture

If by government you mean the families that own the central banks then yes, if you mean some figure heads that rotate in and out of power periodically then no. Government = Central Banks (old money roth/warburg/rockefeller etc.) = Mega-Corps. People who don't understand that equation don't understand the world. There is no seperate entity that is the government. It is merely one apendage of a vast interlocking concern.

Sat, 11/05/2011 - 17:13 | 1849237 DormRoom
DormRoom's picture

If we go back to the gold standard the two most powerful organaziations on Earth will be the Vatican, and the Mormon Church.  Both hold huge amounts of undocumented gold.

 

For further study look @ the inflection points of when Britain & US went off the gold peg (~1932 & ~1970), and the decline of Catholic global influence.

 

The conspiracy theorist in me says the Vatican may be pushing internal Italian politics towards a path in which the Euro will collapse.

 

Also having a Mormon president will be interesting, since his loyalties are to the Church first & foremost. 

Sat, 11/05/2011 - 17:43 | 1849326 infinity8
infinity8's picture

If it all goes back to religion in charge, I'm grabbing the next high-speed asteroid outta here.

Sat, 11/05/2011 - 17:56 | 1849348 AldousHuxley
AldousHuxley's picture

religion = politics = system of control of masses throughout history

 

Mormons....non-profit tax exempt center for your assets with BILLIONS in revenue.

 

and you wonder why Mormons kids are overrepresented in Harvard Business School....They got the money!

Sat, 11/05/2011 - 18:18 | 1849391 infinity8
infinity8's picture

I can't say I've known many Mormons but, the 10 or so that I have, except 1, have been very well off. And all 10 were at least 1/2 fucking crazy.

Sat, 11/05/2011 - 18:21 | 1849393 infinity8
infinity8's picture

but I think that about most people, I guess.

 

Sat, 11/05/2011 - 18:33 | 1849412 john39
john39's picture

Mormonism is a mix of christianity and free masonary.... Its founder, Joseph Smith was a mason and literally copied many masonic ceremonies and beliefs into mormonism.  free mansonary is also a cornerstone of the NWO.   The matrix is all encompasing, including the catholic church.  an institution of any sway is infiltrated and controlled over time.  

I know many fine upstanding mormons....  but, with respect to most of them, I can safely say that their ability to critically think about the church leadership and "conservative" political leaders has effectively been eliminated.  and that is the point afterall, you can see why that would be useful.

Sat, 11/05/2011 - 18:47 | 1849443 infinity8
infinity8's picture

serious cog-dis issues - guess that's why they seem crazy to me. The only family I've ever know that identified as masons was dirt poor and extra stupid.

Sat, 11/05/2011 - 18:54 | 1849461 Raskolnikoff
Raskolnikoff's picture

Puh-lease, Catholic & Mormon gold will get stollen with the rest of the gold of the world by people with the bigger and better guns. LOL, in this day and age the only religion with political might is Islam. Judiaism isn't even a religion anymore, it's a social gentlemen's club by invitation only.

The first thing the Italian leader does when his economy starts to faulter and his leadership abilities start being seriously questioned is he starts ragging on the Pope and the Catholic Church. The Church as any type of political power is a big joke, especially in the United States.

when is the last time any major political figure actually took the Catholic church seriously? ....crickets, no?

Sat, 11/05/2011 - 21:54 | 1849682 nick elsworth
nick elsworth's picture

duplicate post

Sat, 11/05/2011 - 21:43 | 1849683 nick elsworth
nick elsworth's picture

You might want to dig a bit into that statement.  Check out some VP links of this and past administrations for some clues.

Sun, 11/06/2011 - 00:40 | 1849923 Bring the Gold
Bring the Gold's picture

LMFAO, did you say the only religious group with political might are the muslims? Then you proceed to write off the three most powerful religious groups in the world in favor of basically a third world hodgpodge rife with interecine conflict and which stands against usury and banking? That's where the power lies? LMAO! Wow!

Sat, 11/05/2011 - 18:53 | 1849459 CH1
CH1's picture

If it all goes back to religion in charge, I'm grabbing the next high-speed asteroid outta here.

I'm sympathetic, but are we supposed to believe that having politicians in charge has been better?

Honestly, that's political propaganda, and the case for it is damn thin... aside from "everyone knows," of course.

Sat, 11/05/2011 - 20:02 | 1849539 infinity8
infinity8's picture

put the bottle down - sympathetic but what?! did I say that?! Wha. . ?! Propaganda, blah, wha?! everyone knows what?

Sun, 11/06/2011 - 19:18 | 1851453 Yamaha
Yamaha's picture

I think Tyler is a Mormon.

Long Mormons
Short Vatican.

Sat, 11/05/2011 - 22:37 | 1849754 Jonas Parker
Jonas Parker's picture

We're short of titanium?

Sun, 11/06/2011 - 00:44 | 1849928 UP Forester
UP Forester's picture

Tungsten.  Titanium is used in high-temp/high-strength stuff like jet engine compressor blades, tungten is wrapped in a sheet of gold foil and stacked in some Army base in Kentucky....

Sun, 11/06/2011 - 11:51 | 1850444 DeadFred
DeadFred's picture

Good, we have a strategic stockpile of this useful industrial metal and they were smart enough to disguise it as that useless relic metal.

Sat, 11/05/2011 - 21:48 | 1849693 dalkrin
dalkrin's picture

Thanks for that heads-up!  I had been following FAZ in light of the unique positions the Germans find themselves in as the Deep Pockets of last resort.  As I have studied German and spent time in Germany and Austria, I was also able to read the mood from the commentary.

Just registered and posted my first comment.  My skills were rusty, but I got across the gist of my message:  Don't trust the banks.  Both the Euro and dollar are at risk of inflation, and the currency devaluation that entails.  Best advice:  buy gold and silver, keep it to yourself.

Sat, 11/05/2011 - 16:10 | 1849097 kaiserhoff
kaiserhoff's picture

The Pope and the Mafia will not be amused.

Sat, 11/05/2011 - 16:52 | 1849197 pain_and_soros
pain_and_soros's picture

Anyone ever ask how much gold the Vatican has, or should I say, ever get a straight answer when they asked?

I suspect they have more gold than most imagine and perhaps more than any other "country".

Vatican to become the world's central bank?

Sat, 11/05/2011 - 16:59 | 1849213 Piranhanoia
Piranhanoia's picture

Wonder who would come to the Vatican's rescue if the Italians came knocking and said;  "hand it all over".  No one.  They would all come looking for a share.  That instantly solves Italy's issues,  screw off EU.  Italy is now the powerhouse of Europe because they have the riches from longest running looting scheme in history that they get to examine back to its dirty beginnings.

Sat, 11/05/2011 - 17:30 | 1849290 mynhair
mynhair's picture

The Vatican is a sovereign nation.  Mess with it, and the Swiss Guards will stomp yer ass.

Sat, 11/05/2011 - 18:33 | 1849415 john39
john39's picture

all 100 of them?

Sun, 11/06/2011 - 11:38 | 1850418 Bam_Man
Bam_Man's picture

100 Swiss guards with pikes versus the Italian Army.

Would be an interesting contest.

Sun, 11/06/2011 - 00:48 | 1849938 Bring the Gold
Bring the Gold's picture

A little more relevent would be the reaction of 1 BILLION + Catholics.

Sat, 11/05/2011 - 17:34 | 1849305 LongBallsShortBrains
LongBallsShortBrains's picture

Got asset forfeiture?

Sat, 11/05/2011 - 18:55 | 1849462 CH1
CH1's picture

The Vatican has more friends than you would suppose. They've been playing that game for a LONG time.

Sat, 11/05/2011 - 20:11 | 1849561 bmwm395
bmwm395's picture

amen brother

Sat, 11/05/2011 - 17:09 | 1849247 CPL
CPL's picture

Usury is strictly forbidden by the Catholic church, at least at one point in time, hording however has been a many millenial long project.

Sat, 11/05/2011 - 17:26 | 1849286 TwelfthVulture
TwelfthVulture's picture

Yeah, and vows of poverty were de rigueur.  So tell me, how then did they acquire all that gold, silver, precious gems and real estate?

Sun, 11/06/2011 - 07:01 | 1850168 CPL
CPL's picture

Hoarding and whoring ideas mon ami.

Sun, 11/06/2011 - 10:28 | 1850334 Tramp Stamper
Tramp Stamper's picture

The Crusades

Sun, 11/06/2011 - 11:56 | 1850453 Randall Cabot
Sun, 11/06/2011 - 10:09 | 1850314 Desert Irish
Desert Irish's picture

double post

Sun, 11/06/2011 - 10:07 | 1850315 Desert Irish
Desert Irish's picture

The last person who tried to fuck the Vatican's finances over was hung by the neck off London's Blackfrairs Bridge by the masons...so don't underestimate them

Sat, 11/05/2011 - 16:12 | 1849102 Nate H
Nate H's picture

Could be bluff/posturing/poker by ECB. In the end there are few avenues open to them. They MUST support Italian bond mkt

Sat, 11/05/2011 - 16:17 | 1849121 Mike2756
Mike2756's picture

Worked on Greece, how much longer can they keep it up?

Sat, 11/05/2011 - 16:17 | 1849122 DeadFred
DeadFred's picture

Right, this is a bluff with no credibility. Do what I say or I'll shoot myself. Somebody supply the appropriate youtube clip.

Sat, 11/05/2011 - 16:39 | 1849174 Desert Irish
Desert Irish's picture

How about a quote instead - "Don't move or the nigga get's it" - Blazing Saddles

Sat, 11/05/2011 - 16:50 | 1849193 s2man
s2man's picture

Do what 'e saaay!  Do what 'e saaay!

Sat, 11/05/2011 - 17:33 | 1849302 hondamikesd
hondamikesd's picture

Ask and you shall receive! Fuck these fucking jokers.

 

http://www.youtube.com/watch?v=fFl3pWbfVX8

Sat, 11/05/2011 - 16:14 | 1849104 Yamaha
Yamaha's picture

Buying bonds IS a "remedy the errors of politicians" - no free market!

Sat, 11/05/2011 - 16:12 | 1849105 Irish66
Irish66's picture

That don't have the money!

Sat, 11/05/2011 - 16:17 | 1849124 Sudden Debt
Sudden Debt's picture

Don't sweat about it. We've got a boy who's handeling things as we speak.
Remember, I was here all night.

Sat, 11/05/2011 - 16:20 | 1849133 Irish66
Irish66's picture

I know.  Good Luck

Sat, 11/05/2011 - 16:16 | 1849110 LawsofPhysics
LawsofPhysics's picture

Yes, and China will stop buying American Debt or sending their people to American Universites in mass.  Riiiiigggghhht.

Blah, Blah, Blah.  Everyone trying to be the "producer" or the "manufacturer" when ALL their customers are broke.  Fucking stupid.

Cut through the crap, invest in areas of importance where people aren't, any questions?

Boring world we live in.

Sun, 11/06/2011 - 07:06 | 1850172 CPL
CPL's picture

Aren't you late for your CNBC segment?  Because this nonsense sounds better when it's on camera.

Sat, 11/05/2011 - 16:14 | 1849111 The trend is yo...
The trend is your friend's picture

At last check Italy had the 5th or 6th largest Gold holdings as reserves.  Berlusconi is holding the cards and knows it.  What are they going to do let the Euro blow up? Italy will be just fine going back to the Lira

Sat, 11/05/2011 - 16:18 | 1849128 Sudden Debt
Sudden Debt's picture

And like berlusconi said: 'recession? All the restaurants are full in Italy!'

Sun, 11/06/2011 - 11:41 | 1850428 Bam_Man
Bam_Man's picture

And he has to book his teenage hookers six weeks in advance!

Sat, 11/05/2011 - 16:49 | 1849191 Mark123
Mark123's picture

Italy is actually #3 per wikipedia:

 

http://en.wikipedia.org/wiki/Gold_reserve

 

keep in mind this list does not include the Rothschilds, who are reputed to own more gold than all these countries and IMF combined.

Sat, 11/05/2011 - 20:46 | 1849602 schadenfreude
schadenfreude's picture

Could you please provide a link for your statement?

Sun, 11/06/2011 - 00:54 | 1849950 Bring the Gold
Bring the Gold's picture

Like he said it's reputed...not a verifiable fact.

Here's a link for you on the reputed statement:

http://lmgtfy.com/?q=Rothschild%27s+gold+hoard

Sun, 11/06/2011 - 00:17 | 1849884 crazyjsmith
crazyjsmith's picture

U S A
U S A
U S A

Good to know we are still #1 at something.

So glad we have Fort Knox...
Right?
Right?
Bueller?
Bueller?

Sat, 11/05/2011 - 16:51 | 1849196 reload
reload's picture

The Italians have always had a very opportunistic relationship with The Euro/EU, as compared with the idealistic view held by the French. They will not be loosing much sleep over this feeble bluff.

Sat, 11/05/2011 - 16:59 | 1849216 oogs66
oogs66's picture

I think you mean that they won't be losing any quality time with the mistress over this bluff

Sat, 11/05/2011 - 17:01 | 1849217 oogs66
oogs66's picture

I think you mean that they won't be losing any quality time with the mistress over this bluff

Sat, 11/05/2011 - 16:14 | 1849112 The trend is yo...
The trend is your friend's picture

At last check Italy had the 5th or 6th largest Gold holdings as reserves.  Berlusconi is holding the cards and knows it.  What are they going to do let the Euro blow up? Italy will be just fine going back to the Lira

Sat, 11/05/2011 - 16:23 | 1849113 GeneMarchbanks
GeneMarchbanks's picture

It's ah me-eh Mario!

'At that point we will truly see just how "hedged" all those Primary Dealers are, who have perfectly offsetting short positions to all their longs.'

Funny in a tragicomic way...

As for the comment about not bailing out politicians... priceless.

Sat, 11/05/2011 - 16:15 | 1849114 Sudden Debt
Sudden Debt's picture

Don't come any closer or I'll shoot!

I said don't come closer!!

Go away!! You're standing in front of my gun! Or I'll shoot i say!

HE! GIVE ME BACK MY GUN! Orrr..... Oh....

Sat, 11/05/2011 - 16:16 | 1849119 SamAdams1234
SamAdams1234's picture

Monday is shaping up: margin change, Italy AND Greece.....

 

Sat, 11/05/2011 - 16:21 | 1849137 Sudden Debt
Sudden Debt's picture

UK... RBS... Whatever :) there'll be plenty of things read on ZH on monday, and Tyler better get a good nights rest this weekend because he'll need it :)

Sat, 11/05/2011 - 16:23 | 1849139 DeadFred
DeadFred's picture

Then the latest release from rumors.com. ssdd There is way too much negativity this weekend. It's almost certain to be the prelude to a ramp job. But hey, maybe this time it IS different.

Sat, 11/05/2011 - 16:22 | 1849136 Fibz
Fibz's picture

This means Zero Hedgers are going to short. Bullish.

Sat, 11/05/2011 - 18:10 | 1849366 topcallingtroll
topcallingtroll's picture

Everyone always shorts early, even zher's.

However as of now Italy cannot roll over 100 billion plus debt in 2012 without the EFSF or huge increases in ECB purchases.

Put that in your bong and smoke on it.

Sat, 11/05/2011 - 16:23 | 1849142 Sudden Debt
Sudden Debt's picture

"Our job is not to remedy the errors of politicians," he said.

What have they been doing if this isn't so these last.... Since always?

Sat, 11/05/2011 - 16:31 | 1849158 Yamaha
Yamaha's picture

Isn't this the basic job one of central banks? 

1)  Remedy Errors of politicians

2)  Maintain full employment

3)  Keep inflation under control

See they have fucked up all three!  Glad they are here.............

Sun, 11/06/2011 - 00:58 | 1849957 Bring the Gold
Bring the Gold's picture

Real job of Central Banks:

#1 control/create fiat currency conjured with a stroke of the keyboard.

#2 contract/expand said money supply to bring about economic crises

#3 place lien's on real goods and property

#4 further consolidate power for the owners of central bank stocks

Hat tip to this paraphrase from Truthinsunshine

Sat, 11/05/2011 - 16:35 | 1849166 Mark123
Mark123's picture

"Our job is not to remedy the errors of politicians," he said.

 

What he did not say...."Our job is to remedy the errors of banksters"

Sat, 11/05/2011 - 16:39 | 1849177 markar
markar's picture

ECB stops buying Italian debt= game over for EMU
and Berlusconi knows it.

What a fools errand these asshats in Brussels are on. It's all going down anyway so why not end the drama and let it happen already? Oh, nevermind-- there is still a bit more taxpayer wealth to excavate before that happens.

Sat, 11/05/2011 - 16:43 | 1849181 lolmao500
lolmao500's picture

The ECB is bluffing.

Sat, 11/05/2011 - 16:57 | 1849204 oogs66
oogs66's picture

Latest ploy to get IMF money

Sat, 11/05/2011 - 16:49 | 1849189 DeadFred
DeadFred's picture

If Mersch had wanted to deliver an ultimatum he could have called Berlusconi on the phone. Instead he delivers this crafted statement in a news interview. Why? Does he think popular pressure will change things? Is he giving the ECB political cover for a decision which they know they'll hand down soon that will have extreme consequences? This is surely going to squirrel up the markets, is there some reason he might want to do that? If it were Bernanke I'd guess he's trying to get cover for QE3.

Sat, 11/05/2011 - 19:45 | 1849512 Voodoo-economist
Voodoo-economist's picture

draghi is italian, says all about the "why"

Sat, 11/05/2011 - 16:52 | 1849198 Bruin4
Bruin4's picture

OK OK , am I the only fucking one...IMF, ECB, Italy, Greece, Iceland, Germany ALLLLLL of it is an absolute disaster and so? Has it always been this way, have we always walked the razors edge on the precipice between absolute oblivion and salvation? Who the hell is the world bank and the IMF? I mean who invited them to control the world. Who's hegemony is this anyway.

Somebody tell me - has it always been like this or are we really on the verge of a systemic global financial collapse? What is it and why? And lets not forget the When?

AND ALL OF THIS TAKES THE ATTENTION OFF THE US BANKS AND OUR PROBLEMS...Brilliant ploy by the office of information and awareness...brilliant.

Sat, 11/05/2011 - 19:50 | 1849519 Rollerball
Rollerball's picture

Armegeddon has many venues.  Pick your poison.

Sat, 11/05/2011 - 16:54 | 1849201 oogs66
oogs66's picture

Europe going to throw a temper tantrum in an attempt to get IMF money?

Sat, 11/05/2011 - 16:56 | 1849203 Tommy5454
Tommy5454's picture

If Italy does not hand everything over to the banksters, the banksters will contrive a crisis and collapse markets until the Italians give them the answer that they want.

Sat, 11/05/2011 - 17:02 | 1849227 Zola
Zola's picture

DONT WORRY ! Even though the ECB has loaded up on huges amounts of debt that will promptly tank and render them insolvent , they argue about their "exit strategy"... I CALL THE BLUFF. Or wait ...maybe they will ask the CME to introduce NEGATIVE MARGINS !! Just like NEGATIVE INTEREST RATES... Who knows where the lunacy will stop ??

Sat, 11/05/2011 - 17:04 | 1849233 common_sense
common_sense's picture

Thanks to Berlusconi and girlfriends..., the World War III is closer and closer...

Sun, 11/06/2011 - 11:41 | 1850430 Peter K
Peter K's picture

Or... thanks to Silvio and very nice girlfriends, the Euro will fall apart and WWIII will be averted. The end of the process is full monetary/debt/transfer union. Wasn't it a transfer union, i.e. the Treaty of Versaille that caused the last one? As to WWIII, you need armies to fight wars. The last time I checked, all the European armies were downsized to pay for the welfare nanny states:) IOW, no army = no war:)))))

Sat, 11/05/2011 - 17:06 | 1849240 Schmuck Raker
Schmuck Raker's picture

"News? You can snooze."

Sat, 11/05/2011 - 17:12 | 1849255 Withdrawn Sanction
Withdrawn Sanction's picture

ECB = Paper Tiger.  "Italy, you'd better shape up, or we wont give you the money you owe to the banks who own us."

Sat, 11/05/2011 - 17:12 | 1849256 Unprepared
Unprepared's picture

I call bullshit

Sat, 11/05/2011 - 17:13 | 1849259 Atomizer
Atomizer's picture

Higher US individual tax war drum beats louder. Zimbabwe failed to rescue the EU crisis. Meanwhile, US peasants are being set up to fund the IMF quasi account via IRS reform under flat tax.

LOL. Desperate progs in desperate measures routine once again. If we don't pass this flat tax bill, our planet will go out of orbit and you'll all die and perish. LMFAO

Autosuggestion

Sat, 11/05/2011 - 17:16 | 1849267 Lord Welligton
Lord Welligton's picture

Is the ECB deliberately trying to undermine the Euro?

Sat, 11/05/2011 - 18:14 | 1849382 topcallingtroll
topcallingtroll's picture

I think it is a good cop bad cop routine with the ECB playing bad cop to force reform and get italian politicians off the hook.

Sat, 11/05/2011 - 18:31 | 1849408 Lord Welligton
Lord Welligton's picture

Well that sounds plausible in an interview type situation.

But this is not two on one.

This is the bond market and its participants.

Why would China or any surplus sovereign want to invest in Europe if the ECB keeps throwing its toys out of the pram.

These "threats" should be made in private.

The ECB is a dysfunctional entity.

Sun, 11/06/2011 - 06:03 | 1850125 M.B. Drapier
M.B. Drapier's picture

Hm, the ECB almost certainly made this threat in private first - they know about making threats in private, yes? - but Berlusconi told them to suck it. Given that, what else can they do - just go right ahead and stop buying Italy? (They should, because they should never have been propping up any sovereign in the first place, but they won't.) This kind of thing is the unavoidable consequence of ignoring or circumventing Article 123 - well, either this or we skip straight to the beggar-thy-neighbour competitive-money-printing phase.

Sat, 11/05/2011 - 20:41 | 1849596 Atomizer
Atomizer's picture

Lord, how many times do you need to see a dog & pony show to answer your question?

Sat, 11/05/2011 - 22:14 | 1849729 Lord Welligton
Lord Welligton's picture

Fair enough.

Maybe I just haven't got to that level of disbelief just yet.

But Christ I'm getting there.

Sat, 11/05/2011 - 17:24 | 1849282 midgetrannyporn
midgetrannyporn's picture

If the ecb doesn't buy them the bernank or the imf will and the Italians know that and otherwise don't care. No banker left behind.

Sat, 11/05/2011 - 17:26 | 1849285 pain_and_soros
pain_and_soros's picture

Burlesqueoni won't take demands from his own people, why should anyone expect he would take any from the rest of Europe?

The PIGS are actually very smart in one way - they know if you only owe the banks a little money, it's your problem - owe the banks a lot of money - it is the banks' problem.   Keep mortgaging the future with other people's money for as long as you can, then when patience wears thin, and you've piled up debts that can't be repaid, string them along to buy some more time with false promises and hopes, standing resolute in your conviction that the rest of Europe will never cut you off and impose draconian austerity (and if they ever do grow some balls & tell Burlesqueoni to shovel it, turn around and blame all the resulting chaos on Europe.)

This is merely a another game of extortion to the PIGS who are much more practiced and better at it than their northern neighbours and how they've done business long before the euro was conceived - this was all forseeable & should not come as a surprise to anyone.

 

Sat, 11/05/2011 - 17:32 | 1849296 Cycle
Cycle's picture

I know a bit about the history and cultures that exist on the famous boot of the Mediterranean. I can assure you all that all of these different cultures are colluding to give the appearnace to the rest of the world that Italy actually has a federal government.  If you live in Italy, especially in the autonomous provinces of the North, then you know that the whole idea of anyone presuming to govern all of Italy is absurd.  Even the Fascists had serious problems governing.

It would make all of the noble participants in the UN quite uncomfortable if the truth were known - that Italy is an anarchic federation of different peoples and cultures and will probably remain that way. What appears to be a federal government, with all the trappings and pomp is really a wonderful theatrical production which has little say in governance of the Boot and the islands.

And so it goes....

Sat, 11/05/2011 - 17:47 | 1849330 SoCalBusted
SoCalBusted's picture

Sounds like a model the US should try

Sun, 11/06/2011 - 01:13 | 1850026 UP Forester
UP Forester's picture

Anyone ever come up with a list, by country, of all the different languages and dialects historically spoken, and historical "governing", in the Eurozone?

And then come up with the immigrants' languages/dialects/traditional governing?

 

Seems to me you'd have a huge-ass herd of cats to not only head in the same direction, but in formation, while playing the Glockenspiel....

Sun, 11/06/2011 - 09:53 | 1850303 Cycle
Cycle's picture

I was in Italy a decade or so ago when the Swiss government was asked by the Italian government for assistance in revising their taxation system.  The contract lasted a couple of months before the Swiss account-ants decided it was futile and headed home, cutting their losses. They probably missed the food but I bet their sphincter pressures reached critical levels when they understood the enormity of the Gordian knot they were asked to untie.

Sat, 11/05/2011 - 17:33 | 1849303 mynhair
mynhair's picture

Don't look now, but the Martians have hitched a ride on YU55.

Krugman gets his wish.

Sat, 11/05/2011 - 18:16 | 1849386 sabra1
sabra1's picture

it's time for all politicians to put on their new running shoes!

Sat, 11/05/2011 - 17:35 | 1849307 juggalo1
juggalo1's picture

Looks like the EU has a gun pointed at its own head, and is threatening Italy.  Seriously, what is the point of an EU without Italy?  Something big is happenning...

Sat, 11/05/2011 - 17:38 | 1849311 Atomizer
Atomizer's picture

Many ZH posters refuse to read the hand writing on the wall. We all love witty comments, it simply masks the plan no one wants to admit nor do they know how to tackle.

National Security Archive

 

Sat, 11/05/2011 - 17:38 | 1849313 Eally Ucked
Eally Ucked's picture

Probably I’m too stupid to understand all those solutions proposed from right and left.

Ok, all countries should curtail their welfare state spending, start saving and pay their debt.

As I look at the problem all western societies were spending so much only because the welfare state was meant to support them at the moment of need and people listened. They’re still pushing those 99-ers to spend more, to rescue economies and at the same time they should give up any ideas of pensions, social security and so on. Is there any coherent message in it? Those western economies are totally fucked because they depend on people spending and they would not if  they did not have promised SS, they would’ve saved for their retirement and medical needs, isn’t it true?  

Sat, 11/05/2011 - 17:44 | 1849328 Joebloinvestor
Joebloinvestor's picture

Make the Vatican buy the bonds.

Would serve them right.

Sat, 11/05/2011 - 18:13 | 1849372 sabra1
sabra1's picture

c'mon, they create a crises to move the markets in any direction they want! there will be endless rumours, endless meetings, giving the HFT's all the fodder needed to screw everyone! then it'll be spain, then portugal, blah, blah, blah! this is QE3 people!

Sat, 11/05/2011 - 18:13 | 1849374 Mark123
Mark123's picture

Can someone please explain how the ECB sterilizes these bond purchases?  It all sounds a bit fishy to me.

 

Presumably if the ECB stopped buying these bonds they would immediately revert to their NPV (somewhere around a 30% haircut or more?).  So if ECB is really sterilizing - who is buying the risk??? 

Sat, 11/05/2011 - 18:13 | 1849376 johny2
johny2's picture

I love Greece and Italy. 

Sat, 11/05/2011 - 18:13 | 1849377 razorthin
razorthin's picture

Yep.  Rome has about as much discipline as it did 2000 years ago.

Sat, 11/05/2011 - 18:14 | 1849383 dizzyfingers
dizzyfingers's picture

razorthin:

About as much as the US.

Sat, 11/05/2011 - 18:17 | 1849389 razorthin
razorthin's picture

maybe more.  it is at least vaguely aware of its monetary limits.

Sat, 11/05/2011 - 18:51 | 1849452 Bruin4
Bruin4's picture

Your Wrong razor, Rome much more disciplined and organized 1500 -2000 years ago....ask any Centurion. Instant Justice prevents long term mismanagement.

Sat, 11/05/2011 - 18:13 | 1849379 dizzyfingers
dizzyfingers's picture

Not long now. War and/or Islam. European nations dying out.

"But the real peril is Italy, No. 3 economy in the eurozone, with a national debt at 120 percent of gross domestic product.

After the plan to save the eurozone was announced, interest rates on new Italian debt surged above 6 percent, with 6.5 regarded as unsustainable.

When Papandreou announced his referendum, the cost of Italian debt surged again. Should buyers of Italy's debt go on strike, fearing a Rome default or write-down, that is the end of the eurozone and potentially the end of the EU.

But an even larger question hangs over Rome. Will Italy survive as one nation and one people?

For the austerity demanded of Italy to deal with its debt crisis is adding kindling to secessionist fires in the north, where the Lega Nord of Umberto Bossi, third largest party in Italy, seeks to lead Lombardy, Piedmont and Veneto, with the cities of Turin, Milan and Venice, out of Italy into a new nation - Padania.

The north has long resented Rome, Naples and Sicily, seeing them as lazier and less industrious. Bossi, who calls himself "Braveheart," after the Scottish hero of the Mel Gibson movie, sees northern people as Celts who are ethnically different and separate from the rest of Italy.

The Northern League belief that people of Southern Italy caused their debt crisis, bringing on austerity, mirrors the belief of much of Northern Europe that Italy and Greece do not deserve to be bailed out.

As the north is also home to 60 percent of the immigrants who have poured into Italy - Gypsies from Romania, Arabs from the Mahgreb and Middle East - Bossi's party is aggressively anti-immigrant, as are the other surging populist parties of Europe.

Americans who deplore the tough laws against illegal immigration in Arizona and Alabama might look to Italy, where the Northern League managed to have illegal entry into the country declared a felony.

The League was also behind a new law calling for sending back tens of thousands of Arab Spring migrants who arrived on the tiny Italian island of Lampedusa, which is closer to Africa than Italy.

But while resentment against the south for alleged freeloading and causing the debt crisis is bringing the secession issue to a boil, demography may be the greater threat to the national future.

Italy, says Cardinal Angelo Bagnasco, president of the Italian Bishops Conference, is heading for "demographical suicide," and the reason is a low birth rate caused by its "cultural and moral distress."

According to Italy's National Office of Statistics, in 2009 the fertility rate of Italian women was 1.41 children per woman. This is only two-thirds of what is needed simply to replace Italy's existing population.

Italy's fertility rate has been below replacement levels for 35 years. By mid-century, Italy will be a nation with a birth rate that will have been below, at times far below, zero population growth for 75 years.

Italy's birth rate in 1950 was almost twice its death rate. But the death rate equaled the birth rate in 1985, exceeds it today and will be approaching twice the birth rate by 2050.

Italy is not only aging, with the median age of its population going from 43 today to 50 at midcentury, Italy is dying. If this does not change, what the world knows as Italy will not exist at the end of this century.

Like other European nations, Italy faces an existential crisis.

Her national debt is twice what the EU says is tolerable. She must undergo years of painful austerity to pay back what she has borrowed and spent. Yet a shrinking population of working age young and an expanding pool of seniors and aged to care for will make that increasingly difficult, and default on her debts increasing attractive, as it is today to the Greeks.

The Northern League, seeing the south as the source of its troubles, will grow in appeal, as those troubles grow.

If your debts are larger than your economy, your death rate exceeds your birth rate and every new generation will be one-third smaller than the previous one, what kind of future does your country have? The kind of future Italy faces."

http://www.freerepublic.com/focus/f-news/2802671/posts

 

 

 

 

 

Sat, 11/05/2011 - 20:30 | 1849583 pain_and_soros
pain_and_soros's picture

Italy, says Cardinal Angelo Bagnasco, president of the Italian Bishops Conference, is heading for "demographical suicide," and the reason is a low birth rate caused by its "cultural and moral distress."

Well, at least Burlesqueoni is doing his part to improve the birth rate by doing as many young women of prime child bearing age as possible, setting an example for his fellow Italian countrymen...

 

Sat, 11/05/2011 - 21:57 | 1849704 slewie the pi-rat
slewie the pi-rat's picture

arrivederci, BiCheZ!

Sat, 11/05/2011 - 18:14 | 1849384 holdbuysell
holdbuysell's picture

One wonders just how long these 'tectonic plates' can grind against each other before the instantaneous seismic shift occurs.

Sat, 11/05/2011 - 18:16 | 1849387 ebworthen
ebworthen's picture

The Euro dream is dying.

 

Sat, 11/05/2011 - 18:26 | 1849400 topcallingtroll
topcallingtroll's picture

Sad but true.

On the bright side the dollar will no longer have any meaningful competition.

Sat, 11/05/2011 - 18:52 | 1849457 johny2
johny2's picture

if you mean dollar will lose the race to the bottom and come second or third, than you are probably right. But the real competition to both euro and dollar is going to be around a long time after both of them are forgotten.

Sat, 11/05/2011 - 19:07 | 1849469 topcallingtroll
topcallingtroll's picture

I just need ten more years of extend and pretend. Looks like I may get it.

Sat, 11/05/2011 - 19:21 | 1849486 johny2
johny2's picture

And if you don't get it, just remember...

you can't always get what you want, 

but if you try sometimes, well you may find,

you get what you need

 

Sat, 11/05/2011 - 19:53 | 1849528 mailll
mailll's picture

An attempt to crash the dollar will be next.  Hopefully the US is smart enough to catch on to their game.  When Europe fails to pay their debt, the Elite will own Europe, or they will introduce a new currency.  It is called binary numbers.  Yes, electronic money.  No more dollars, no more euros, no more hard currency.  Just a one world electronic currency.  Everything points in that direction. Watch for it. 

The same thing is happening here but in secret.  The Federal Reserve is secretely buying up more of our treasuries than they are saying.  Much more.  Why do you think interest rates on US Treasuries is so low? The time will come when they will secretely stop buying them.  Then we will become just like Greece, just like Italy, just like Europe.  We are not off the hook by a long shot.

Sat, 11/05/2011 - 18:48 | 1849446 lolmao500
lolmao500's picture

The euro nightmare you mean?

Sun, 11/06/2011 - 09:11 | 1850263 Vendetta
Vendetta's picture

international bankers dream, people's nightmare

Sat, 11/05/2011 - 18:29 | 1849404 Librarian
Librarian's picture

For a guy like Berlusconi the ECB needs to do much more than the simple carrot and stick approach.

I suggest a modified form of the carrot and stick where in if Italy doesn't perform to the ECB's satisfaction that it's  carrot gets chopped off.  How this happens is that the ECB rounds up all the ugliest whores in Europe and send them over to Italy while simultaneously making all of his Berlusconi's bunga bunga playthings honorary MEPs at which point they will be headed to Brussels every weekend to sign in for their monthly 14,700 euro salaries.  The ECB might have to pay them a bit more. You know that there are some things that even whores won't do for money, unlike the politicians.

After two weeks of this, the Italian government would pass anything the ECB wanted.  Call it the Lysistrata approach. 

Probabably as history does tend to repeat itself, Greece is clearly in the "Thirty Tyrants" phase of its remake off the Pelonnesian War with no Thrasybulus in sight.

Sat, 11/05/2011 - 18:31 | 1849409 Pilatus
Pilatus's picture

Well, I have been trading BTP Futures more or less from day on LIFFE until they delisted them because who needs BTP's when you can hedge the same risk with Bund Futures. And now???? Bunds are trading with the same volatility ( a lot ) and liquidity ( none ) as BTP's used to back in the early 90's. The only difference is the interest rate. I am sure that they will adjust to the 90's as well, which means much higher interest rates for Italy AND Germany.

Sat, 11/05/2011 - 18:49 | 1849447 SHEEPFUKKER
SHEEPFUKKER's picture

Get your house in order Burlesque-phony.  Sell you bonds to the ECB and buy more hookers and blow.

Sat, 11/05/2011 - 18:51 | 1849453 Pondmaster
Pondmaster's picture

Dormroom

"Also having a Mormon president will be interesting, since his loyalties are to the Church first & foremost."

 

Not a church its a cult . We are in for a world of hurt if this hack gets elected . Wonder whom he will say has appeared to him ? Telling him to tear up the Constitution and implement Morman Law . Do a study on the Mormon Church, you'll freak . Rather have a Muslim 

Sat, 11/05/2011 - 19:19 | 1849484 topcallingtroll
topcallingtroll's picture

As far as I am concerned all religions are cults and some are quite dangerous. Why are all the people of the book so warlike?

However primitive, unenlightened people need their sky daddies and sky wizards, and governments find them useful too.

Many people cannot tolerate the possibility that there is no central purpose to life and the universe. They need an authority figure and a plan to follow. That is the lowest form of human existence, those who want someone else to provide them with structure and purpose.

And that human fault among the masses is also responsible for cults of personality.

Sat, 11/05/2011 - 20:19 | 1849575 mailll
mailll's picture

I am a Catholic, but when the Vatican kills its own popes, I choose to simply call myself a Christian. The Vatican City and the City of London are perhaps one in the same.  The Vatican is just as corrupt as the governments of the world. But as a Christian, I've learned that the answer doesn't lie in a plan or a form of government.  I've learned that the answer lies within. I try to depend on myself, and not on everyone else, and especially not on the government.  But the government wants to take away our dignity and cause us all to depend on them, so they can have more control over us.  Half of this country (USA) is on some kind of government assistance right now.   And it isn't getting any better. 

Sat, 11/05/2011 - 21:55 | 1849701 web bot
web bot's picture

If you were a true Catholic, you would not be parlaying this popular culture nonsense. How little you really know...

Sat, 11/05/2011 - 19:10 | 1849475 steveo
steveo's picture

I wrote this is response to a new blogger who questioned why all the bad news, cant we have some good news to show how things are getting
better.

It is clear that things won't be "better" until we can
extract this vampire squid called the nuclear industry from continuously
 injecting us with radiation.   Until we can shutdown all the nuclear plants.....rest of the article is here

http://oahutrading.blogspot.com/p/japan-nuclear-information.html

Sat, 11/05/2011 - 19:14 | 1849478 Oswald Spengler
Oswald Spengler's picture

Hey ZH fans. I've been out of sorts for awhile, having been placed in the slammer for violating a restraining order. I'm out now, badder than ever, but somewhat chastened by the experience. I see nothing has changed in the world and the Wops have taken center stage in the PIIGS debacle. Too bad I had to sell my silver to pay my lawyer.

Sat, 11/05/2011 - 20:02 | 1849540 Rollerball
Sat, 11/05/2011 - 20:18 | 1849571 jomama
jomama's picture

just couldn't leave her alone, could you?

Sat, 11/05/2011 - 22:24 | 1849723 slewie the pi-rat
slewie the pi-rat's picture

your lawyer is obviously a dumbass or s/he woulda just taken the silver

Sat, 11/05/2011 - 19:23 | 1849492 Little Red Rooter
Little Red Rooter's picture

Potash and lime bitchez!

Sat, 11/05/2011 - 19:34 | 1849501 mailll
mailll's picture

Sounds like the ECB is in the lonesharking business. 

Sat, 11/05/2011 - 19:44 | 1849513 lapedochild
lapedochild's picture

The ECB can not not buy Italian bonds

The IMF/EU can not not give Greece the next tranche

Stopping the flow means the endgame is here, ECB, please stop buying bonds

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