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Goldman Sachs On Italy: "What's Next"
Some much needed clarity from the people who run Europe's printers. And, just as in the case of Credit Suisse, Goldman is desperately pushing for Italy to avoid precisely the outcome that Berlusconi has said is coming, namely early elections: "These could be held in mid-January at the earliest, although they would most likely be postponed until the Spring amid market turmoil. This would represent the worst scenario for markets, in our view. Since President Napolitano is aware of this, he will probably try to resist dissolving Parliament at this juncture. Also, most centrist parties would want to change the electoral law before a new vote takes place. All these scenarios will take some time to play out, a couple of weeks at least. In the meantime, the higher priced Italian government bonds will continue to be sold, as gradually higher margin requirements are applied. On our central case, intermediate to long-end bonds should continue to be supported relative to AAA-rated securities by the ECB."
From Goldman Sachs:
Italy - What's Next
After seeing his parliamentary majority decline further in a routine vote earlier today, Italian PM Berlusconi offered to resign once Parliament approves new austerity measures, possibly towards the end of next week. We see three possible outcomes at this delicate stage, with different implications for the BTP market and Italian risk premium more broadly:
Most likely scenario: In the coming weeks, the current centre-right coalition of the Northern League and PdL moves to rally round another candidate who can gain wider acceptance domestically and internationally. In order to broaden its support, the new government may reach out to smaller centrist parties which can advance their own political agenda.
A centre-right executive backed by a broader coalition and committed to implementing the ‘troika’s' economic platform could eventually stabilize markets. But the newly appointed Cabinet would need to prove itself first, and the protracted uncertainty would weigh on economic growth. Furthermore, reforming the pension system could meet resistance from the Northern League. Still, it would be hard for the ECB and Italy’s EMU peers not to stand by a new Italian government genuinely trying to pursue reforms. Under this scenario, thanks to the ECB’s interventions, we would expect BTPs to remain capped at around current levels (400-450bp) over the average of Germany, France and the Netherlands until measures are gradually approved.
Second most likely scenario: The centrist parties ultimately turn down the offer to join a broader coalition. In this case, more MPs from Berlusconi’s PdL party could join forces with formations at the centre of the political spectrum. This could pave the way for a government of national unity of sorts, led by a highly reputable ‘outsider’. Like during the crisis of the early 1990s, the advantage of such a ‘technocrat’ government is that it would be sworn in after some ‘initial contracting’ on its programme (economic reforms agreed with the ‘troika’, plus a new electoral law), which should lower the implementation risk. A technocrat government could use its credibility to introduce more growth enhancing measures that would pay off further down the road. Lastly, it could focus on improving governance (fiscal rules in the constitution, a smaller public sector, etc).
We view this as the most market-friendly outcome, as it would lead over time to a decline in sovereign spreads and in Italy’s risk premium more broadly. The front-end would re-price more than intermediate- and long-term maturity bonds because investors would likely take advantage of the rally to reduce exposure at higher prices. Nevertheless, we would expect BTPs to fall to around 350bp over Bunds in fairly short order.
Least likely scenarios: After Berlusconi’s resignation, general elections are called. These could be held in mid-January at the earliest, although they would most likely be postponed until the Spring amid market turmoil.
This would represent the worst scenario for markets, in our view. Since President Napolitano is aware of this, he will probably try to resist dissolving Parliament at this juncture. Also, most centrist parties would want to change the electoral law before a new vote takes place.
All these scenarios will take some time to play out, a couple of weeks at least. In the meantime, the higher priced Italian government bonds will continue to be sold, as gradually higher margin requirements are applied. On our central case, intermediate to long-end bonds should continue to be supported relative to AAA-rated securities by the ECB.
In conclusion, we are most probably approaching the highs in Italian yields (currently around 500bp over German Bunds in the bellwether 10-yr sector, and 600bp in 2-yr maturities), but a volatile and unsettled market remains our base case until Italy’s sovereign creditors can be reassured that long-awaited structural reforms to lift the country’s growth rate will be put in place.
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What's next is that our man Monti is in the casa
I can tell you that "What's Next" will not be a Italian Government of National Unity.
I'm only interested in:
China next with it's 174% debt to gdp?
Ireland & Portugal defaulting?
5 more European banks being nationalized with 3 of them in France?
KBC in Belgium also defaulting pulling Belgium down the gutters?
Isreal launches preemptive nuclear strike against Iran, Syria & Egypt?
Who knows :)
Only three days until 11/11/11.
Place your bets!
11/11/11 officially kicks off the 12/12/12 season!
There's a massive shit-low that's spent the last decade forming above the shit-riddled, steamy financial waters beneath the global financial system. Yes -- the conditions are ripe for a Category-11 Shit Hurricane. It is now coming to shore
(Don't tell me the scale "only goes to 5". This one goes to 11. And not because we're nearing 11/11/11... although that comes into play.)
You mean, like this?
http://www.alaskadispatch.com/article/north-pacific-super-storm-makes-it...
I am at work, so I can't dig up that trailer park tv show with the drunk talking about shit-pressure from the shit storm and the goofy guy in coke bottle glasses is freaking out ... so I will defer to someone who can.
Regards,
Cooter
11/11/11
The Illuminati are so ingenious, with such a cynical sense of humor, also.
I can hardly await the trick or treat they're going to unwrap for the plebes.
If only I could break their code!
And on 11/11/11, as in many coded dates past, the Illuminati sayeth onto the plebes:
I wonder if anything is really going to happen. It's almost too obvious. Seen 11/9 mentioned too. Guess we'll see.
Would someone mind explaining to me this 11/11/11 deal? I've seen it mentioned in a few places. I assume from the comments below that it has to do with Illuminati or somesuch? Or 11/9. Thanks.
Part of the Illuminati religion in addition to Lucifer worship and you believing yourself to be a god, is a belief in "sacred" numbers. 3, 9, 11, 13, 33, 666 for example are believed to have special power. There are sacred numbers hidden in some of the Illuminati controlled companies logos (see the three elevens in Bank of America's logo) The modern illuminati religion is actually a patchwork of several different ancient religions. One of those is Pythagoreanism http://en.wikipedia.org/wiki/Pythagoreanism. That's where the numbers/mathematics have mystical meanings idea comes from.
They are devil worshipers after all, so they save the real evil events for dates or locations that correspond to mystical numbers. 11-11-11 could be one of those dates. But we'll just have to wait and see, only they know what they're going to do and when. That's the advantage of running the world via a secret closed society.
Interesting. Thanks for the response. Have any sites that demonstrate the connection to the numbers? Three is of course a sacred number in most religions (completeness/Trinity/trimurti/divinity). Nine is 3 squared, which is common in sacred numbers. Eleven...the faithful Apostles? Or perhaps the ten emanations of God in Kabbalah plus one (God)? 13, just one and three obviously, or Christ and the Apostles/Master and Disciples. 33, 11x3 or the age of Christ. 666 needs no explanation obviously. But can you demonstrate the connection between Illuminati beliefs and a particular obsession with these numbers?
Mostly curious now, regardless of whether there's anything to 11-11-11. I always found Gematria (et al.) very interesting, as it's even quite prevalent in the Bible (the 3, 4, 7, 10, 12 scheme which fits virtually everything in there for various reasons).
A Little Italian Nursery Rhyme (translated)
'This little piggy went to the bond market.
This little piggy worked with the ECB.
This little piggy ate gyros and rioted.
This little piggy had none, zippo, nada, bubkus, zilcho.
And this little piggy went wee wee wee and then Lira'd all over the Euro, the USD, and every other fucking currency in existence.'
+10 :)
Do they want the Trevi Fountain or the Isle of Procida? Hmmmmmmm
Trevi would look great in my back garden!
I wonder when they put it on Ebay!
Let's hope shipping costs won't be to much....
OT: Does anybody know who provided the short term lending to MF Global; the primary player who pulled the plug on them?
JPM?
the worst scenerio for markets is when the rumours stop coming!
The "un-rumor" (reality) is"
Brent crude @ $115.28...so much for "transitory inflation"
That is truly that.
The only thing that matters is a refinery has to pay $115 for a 42 gallon barrel of oil in order to make gasoline to push Italian cars and trucks and scooters around to the tune of 1.7 million bpd of consumption ($71 billion/year).
They are draining 4% of GDP out to whoever will sell them that oil.
The rest of this bullshit is handwaving. Oil is all that matters.
Yes, that makes sense. Tylers, so when are you coming out the with zh rumor indicator available on TOS. Chickens flying, shit flying graphics.. that sort of thing. Xbox apps for trading.
A new trading platform is born...
Yields will go higher if a political party dares to confront the 3 stooges aka Troika aka GS et al.
The squid has spoken.
Now SELL SELL SELL!!!
I translate for everybody: BUY BUY BUY
(after Thanksgiving we can talk about selling...even of a crash!, december is good because NOBODY EXPECT A BIG SELL OFF IN DECEMBER...PLEEEEASE.....IS NOT POSSIBLE....HUMMMMM)
Sorry, I can't trade squid spew very well. THe slime gets into my keyboard and makes my fingers all a bunch of goo. Damn, worse than good porn, without any feeling at all.
"although they would most likely be postponed until the Spring amid market turmoil."
What turmoil?
Things look awful boring and the PPT and rumour mill seem to be very effective market props.
No shit....the most likely scenario on steroids...
"...In the coming weeks days/hours, the current centre-right coalition of the Northern League and PdL moves to rally round another candidate who can gain wider acceptance domestically and internationally..."
Almost sounds like GS has already picked someone to step up to the plate. Hm...
They rally 'round tha family,
with a pocket full of shells.
And the markets roll along. Yawn.
Its time now to play, the NEW comedy show: "How Far Can YOU Kick The Can?"
Only thing Italian I am interested in right now is an invitation to one of Berlusconi's parties.
Be a great time for Northern Italy to bring up secession, doncha think?
We get a common denominator. Never let the people have a say.
Goldman the can kicking bullsh*t is coming to an end. so forget about your clued up research on a region that you know nothing about, Europe is a zombie. After Italy, Spains 10yr will blow out then portugal, the ireland again etc etc etc. it's finished that and you a-holes will get squeezed. so no running to obama this time. you will take the pain...
here is the bet silvio says a big f*ck you to you, germany france and everyone else holding his junk. he brings back the lira, sends the bond holders to the cleaners, scales back austerity and smokes a fat blunt. i don't like the guy, but over goldman and the bs from wall street. l'll take the gangstar
Bunga didn't become a billionaire by being someone's bitch. Merk, Sark, and the bureaucrats have a tough lesson coming.
Goldman rules the world incase you two din't know...OK that does it, you two are going on report, wait until Mr. Blankfein learns about this...
That's Lord Blankfein to you, Sir.
And he has the gold reserves to do it too! Well, assuming Italy could keep their trade balanced...
Regards,
Cooter
Berlusconi is vaguely reminiscient of Enrico Mattei. Mattei stood up to TPTB of his era and pushed hard for an independent Italy... CIA wasn't too pleased with his ambition though. I just wonder if the politician/mafia version of Mattei will have the balls to tell the Merkozy pussies to fuck off.
Excellent point, I think they will.
"be reassured that long-awaited structural reforms to lift the country’s growth rate will be put in place"
Umm and just what "structural reforms" could possibly "lift the country's growth rate"????
What are these guys smoking?
Well Old BungaBunga ain't actually resigned yet.
i just called in the bet with my bookie.....ol bunga bunga aint going nowhere. buying time to appease the markets and consolidate power. he is not g-pap.............remember g-pap is a pussy and berlusconi eats pussy. big difference in leadership.................
You stole my picture!
i need a drink...scotch right now
The reaction of Charles Krauthammer on the Greek referendum, yapping about what a good thing it was that the referendum was cancelled and how the markets dodged a bullet says it all.
They spent decades flapping their lips about people’s right to “self-determination” back when it was all about battling the Soviets. They’re ready to send troops all around the Middle East to knock off governments supposedly to free the poor oppressed Arabs.
But when democracy gets in the way of their stock portfolio and threatens bankster bailouts all bets are off, they’ll shamelessly look right into the camera and tell us what a good thing it is when it gets squashed.
Funny how it all works:
http://michael-hudson.com/2011/06/how-financial-oligarchy-replaces-democ...
Lets see....we're all bankrupt...so we need to schedule ELECTIONS! Yea...thats the ticket.
Does this really matter much? Seems like same shit every day and nothing ever really changes and nothing ever really happens as a result.
this is the arab spring EU style a quiet chat in backroom and presto a new presidente or prime ministero without an election
compared to their Arab counterparts who fight to the finish these guys go out with a wimper
There will be no stinking elections in Italy, Berlusconi is having his Gpap moment before he exits to become principal of some girls school
Actually something does happen...Dow rockets higher every week...maybe that is where the Greeks and Italians are hiding their income...Western Uniongrams to their Merrill Lynch brokers...
poor berlusconi, trying to fend off the double secret undercover italian goldman sachs political agents is harder than trying to stay in power when the cia is gearing to topple you.................
not only a Goldman adivsor but EU chair of the Trilateral Commis
http://www.trilateral.org/go.cfm?do=Page.View&pid=34
What's next is Dow 12,700!
no much higher, things are unfolding as they should as the banksters are now emerging from the backroom to centerstage in an economic coup
Already been there....THEN what?
I know stocks suck all the oxygen out of the room, but if all were well, if any real credible plan or hope for one truly existed, then the bond market would agree.
Those two MUST reconcile some day. Either the bond market is right or the stock market is right.
They WILL reconcile, and it won't be pretty for stocks. It's exasperating waiting, but it will happen.
What you’re describing is a Ponzi scheme. It’s okay if it never comes to an end.
Las Vegas outlaws “systems”; if they catch you playing a system they throw you out.
If Goldman and Credit Suisse had this as the worst case, who had it as their best case. The Algos. Bastards
HAL 9000 forcing market to close above 200 day moving average. then it will spend the next 12 hours selling in the afterhours
We watch this shit every day, story by story, we know its all screwed but overall its a total waste of time to even pay attention. Could have gotten the same just sitting on the beach for the last 200 days.
and yet our computer monitors are ablaze with the minute by minute updates!!! such an addiction!!!!!
Yup, next stop is 13,000 on the Dow, then 14,000, and so on. While I'm not certain which way the next 20% will be, the next 100% is most definately up.
Machines + Valuatrions + the Federal Reserve + Government + Value Investors + still much fear = Market's skyrockert no matter what the outcome of Europe is (which will most assuredly be a can kick for 9 months or so).
I'm no longer fighting the trend and I feel wonderful for it. You should try it. Another $$$ day. This is getting fun.
LOL now that everyone is a 100% convinced bull, markets probably just top ticked and down -15% from here. Whats the point of saying youve got the rigged casino figured out? LOL yea sure ya do.
Oh and BTW even if you claim to be the most nimble market trader out there and win every day, youre lucky to keep up with inflation and currency fade.
Sheepy, I'm just totally mocking the fucking market. The problem is no one questions any of these midday spectucular moves. And what really drives me apeshit is that all these moves just validate the "the stock market" is cheap shit, and that's why it's going higher, and blah fucking blah blah.
And yet, even guys like Kyle Bass are piling into stocks again. WTF.
I have to laugh at guys that are just now piling in, at the 200 ma? That makes a lot of sense. Normalcy bias will get these people one of these mornings big time.
If they could print their way to 14000 they'd have done it already. The new mint always goes more into commodities than stocks. That's why I'm leaving my puts on. They can only goose the market so far before oil rips and then they have to turn the bus around and fleece everyone on the drop. Problem for them is, each time it happens they destroy a little more of the markets credibility. They've killed buy and hold and more and more people dropping out.
Sorry, now I get ya, I didn't pick up the sarcasm.
RE: Bruce Krasting's post today about Pensions, the only way they will ALL be bailed out is by rising EQUITY MARKETS which somewhat explains my question of Why all the hedge funds loseing money? Where does the term "hedge" fit? Stocks are the only market left, so everyone is unhedgedly long waiting for the surf to roll in, but guess what? Europe is gonna suck up all the tidewater, and the dividend stocks will all go bust with lower sales (including electricity) and FURTHERMORE! Ha, furthermore. All these stocks with huge cash balances? Which FOREIGN banks are those balances in? Are any in Europe? Probably, our biggest trading partner is EU. H.m.m.m.m.
Its easy to see why everyone's positioned for a skyrocket stock market, its the only market left! It'll be like stuffing dollar bills thru the tight end of a funnel! Its also very easy to see how this all goes DRAINO in a circular fashion, very quickly. To quote the Late Great Sir James Goldsmith, "We're riding the Merry-go-Round to Hell", 1987.
The EuroBozo Committee has us hanging at every word, yet in the case of Silvio "Resign" means "Stay On", since 2013 is beyond the end of the world's timeline.
Q: Has G-PAP quit yet? Q: Is Corzine in office detention yet at his new Treasury desk? Q: Why no DEXIA CDS payouts? Q: Who is travel agency for G20 (go long)? My head is about to explode. Bass bot a BK mortgage insurer, that's brilliant, augh. I won't even mention my stupid Q&Aw/Larry, really I won't.
This is exactly what it will take, this statement repeated by tens of thousands or hundreds of thousands. It very well may push the Dow to 14k.
But then you will have a Dow sitting back at the all time high, but this time with tens of millions unemployed or underemplyed, millions of homes in foreclosure, wages falling and prices soaring, and a bond market in total disagreement over Europe.
That's when the big guys pull the plug on stocks and drain whatever life blood ma and pa America have left. But first they need all in, as expressed here.
Anyone have any idea why gold dropped off 1800, to under 1780 in such a quick time?
Endless fiat to the banksters means they get to do whatever they want to the paper markets.
germany faxed fort knox, wanting what's left of their gold. 10 grams!
Because I withdrew my topcall, capitulated, and went long.
"Let them eat veal scalopini."
The Western-world politicians seem to consider the free/peaceful quasi-democracy of the last 60 years as just an incovenient legacy system.
Screw democracy, screw the people and screw jailbait prostitues.
Whats the Italan word for "bitchez"? Puttani?
Just last week 6% was the line. Today 6.7% is the new normal. Next week 7.5%....10%...
Cheney was right: debt doesn't matter. Clearly, the markets don't give a shit. So why should we?
Goldman Sachs and all the other TBTF shits are SCUM
Harry Markopolous needs to be put in charge of the SEC. Or better yet, shut the SEC down, and have him build one from scratch.
http://www.nytimes.com/2011/11/08/business/in-sec-fraud-cases-banks-make...
These a-holes just break the same law over and over again with just a slap on the wrist.
I think that the SEC was originally set up to protect the banksters turf, not to regulate the markets.
pods
Remember. He 'promised' to resign 'after' reforms are past. He has a long time to tear up a lot of favors before he leaves office. This is going to get horrible--fast. Who wants Italian Bonds? Only the ECB.
Who would want to be in a government whose job will be to inflict austerity upon an unwilling populace? It is political suicide.
Suppose they held an election and no one ran?
- BEST SCENARIO FOR GOLDMAN : BAILOUT BY SEC ASAP
- BEST SCENARIO FOR REST OF THE PEOPLE: LET'S GO GOLDMAN GOING TO BANKRUPTCY ASAP
Whatever is the worst for Goldman, has to be what’s best for the people. And, of course, what’s worst for Goldman is a vote by the people.
The point is, any meaningful reform cannot happen with the international banking cartel still in charge, because reform means tying their hands, making them take a haircut, or sending, in the case of Goldman and similar others, some of their key officials to prison.
Reform measures will happen only under two conditions, in my opinion :
One, the system completely collapses and representatives of the people regain their authority. Two, the collapse begins to happen – enter Stage 1 – meaning the people get enough authority to institute real reform before it all comes down. The latter is most likely in my view.
There is no way simply to tweak and twist the current world financial system with its ingrained corruption and prerogative over the issue of money and expect real change – real change is not going to happen until the Money Power, which has become the governments’ Government, has been removed.
IOW, when you see an announcement from Goldman Sachs that several of its officials need to be in prison, you’ll also see pigs flying over Wall Street.
Until then, it’s the Goldman Mantra:
Keep your hands up, face the wall, and drop your wallet.
If elections are going to be bad for the markets they should probably just stop having them. (elections that is) I want a government for the stock market by the bankers. I want the market to go up everyday even if we have to debase the currency we measure it to do it and I want to cheer with CNBC and Crammer when the bell rings. Yeah!
"Wall Street ends up as Europe lifts optimism"
http://finance.yahoo.com/news/Wall-St-flat-as-Italian-rb-2978933365.html...
How does Berlusconi's departure create the millions of new jobs needed to fix what ails Italy and the rest of the EU?
100% FUBAR markets.
Nymex crude pushing toward $100:
http://www.bloomberg.com/energy/
Great job, Chairsatan! Keep destroying the US Dollar and maybe oil will surge past $100 just in time for the holiday season.
100% FUBAR.
The world will WISH it is only printing.
There was no printing in June of 2008 when it hit $147.
Geology is rather a lot more powerful than Ben Bernanke.
"There was no printing in June of 2008 when it hit $147."
You are dreaming if you think oil prices surged to $147 based upon supply and demand.
Please save any planned "Peak Oil" lectures you have in mind for 'The Oil Drum' instead of here on ZH...
there is no phrase I hate more than "the markets". Note that term is never defined. I think when it is used people should say the front running hft algo's, self interested banking prop desks, and hedge funds. When you say markets it implies so much on an emotional level that just isn't true anymore.
Alla bears killed waaaaaaaa
question for the geeks here with computer power and analytical skills i don't have. so today the s and P 500 touched the 500 day moving average again. tlt (twent year treasuries) may just break below their 50 day moving average. Hasw ther ever been a case where the twnety year has been so much above it's 200 day moving average, while the stoack market is at it's 200. is this type of divergence common, and does it imply anything.
So we kinda retested the twenty year's lows again this week. something I'd have liked to see in the stock market. the twenty year traded as I'd expect, not the markets.
so gents, what the fuck? I think this is all so screwed up. any thoughts from anyone.
meanwhile oil hit an 8 week high?
The system isn’t working anymore.
Time isn't buying the market manipulators a solution. It’s buying them cement shoes. And the quagmire they’re standing in is getting deeper and deeper...
IOW, you’d better hang onto your cash; the world is going to blow. Today there is more debt than money; the governments of the world are debt saturated. And that’s not counting derivatives.
There are going to be floods of bank failures; the banks aren’t solvent. When the international banking cartel gets all the cash into debt, to hold dollars may not be all that bad. IOW, when Bernanke tries every trick in the bank to get cash away from even the savers in order to force everyone to borrow-borrow-borrow, cash may be just the thing.
The stock market is just bets. And when a company goes bankrupt, all you’re left with is a bet it was going to make it. When it doesn’t, you get nothing. At least with savings and fixed income securities, even earning negative interest, you're left with some cash.
Bernanke is a pretender; pretending we’re anchoring ourselves to reality and stability. But look at the explosion in commodity prices; look at the instability of the price-level, look at the gross distortions to producers of new wealth; look at the hideous oppression of savers and small businessmen; look at the distortions in home ownership; look at the flagrant injustices from the money manipulation of markets… and, then, tell me all is well with the economy because all is well with Wall Street.
What is best for the stock market is not necessarily what's best for the country.
Seriously?
but a volatile and unsettled market remains our base case until Italy’s
sovereign creditors can be reassured that long-awaited structural reforms to
lift the country’s growth rate will be put in place.
Yes austerity and the EU entering recession are bound to "lift the country's growth rate". As i am bound to lose weight sitting on my ass eating burgers and fries.
What really changes if Silvio goes? We seem to have a short term magical thought-hope process going on that all can move in the right direction if he goes. It is even more magical that we are seeking potential comfort in the idea that in both Italy and Greece unelected 'technocrats' can come in and tidy up the country...how bonkers and illegitimate is this idea.
One is outraged by how Greece got to where it is and bemused by Italy...but that does not justify denying people of their democratic legitimacy.
Lets face it, at the end of the day all the cards are in the hand of Germany. What is she going to do? Because the EFSF math and structure doesn't work.
This urge comes over me EVERY time I hear or read the name,so....I just gotta say it.....
.........................Fuck Golman Sachs...........!!!
Why would elections be the worst case scenario for markets? That's a rhetorical question. Basically GS is saying the only hope for the elite is to transfer the liabilities associated with their greed-induced stupidity to the populace. Elections slow that down. The best course of action is to install some technocrat puppets to get with the program. It's time to burn this entire MF'ing travesty of a financial/political system to the ground and start fresh. Reforming it is an exercise in futility.
This is like changing the captin of the Titanic after hitting the iceberg.(outcome remains the same)
No wonder the politicians are lost, if their advisors are just a lost. The blind leading the blind. On a side note, never thought I would be saying that about GS:(