As Italy Hints Of Subordination, Did Rome Just Request A "Semi" Bailout?

Tyler Durden's picture

That Italy is now at most days away from technical insolvency is not news: after all we reported on just this a week ago, citing not some fringe lunatics but Bloomberg economist David Powell who said that "Italy would probably be forced into receiving a bailout if it were to face another two weeks like the last seven days." Specifically, "The country would violate the IMF’s definition of solvency if its average cost of debt were to surpass 680 basis points. The fund defines debt as sustainable if the  debt-to-GDP ratio starts to decline before the end of the forecast horizon. A rise to that level would push the ratio up to about  131 percent in 2016 and marginally higher the following year, according  to Bloomberg Brief estimates." This was a week ago... so one more week left, and things have not only not gotten better, they have gotten much worse.

Which is why we were not too surprised to read the following news from Reuters: "Italy will push this week at a meeting of euro zone finance ministers for a semi-automatic mechanism involving the European Central Bank or the permanent bailout fund ESM to reduce spreads of euro zone bonds over Germany, Italy's European Affairs Minister Enzo Moavero said on Monday."

Having done this for a while, we can tell Italy what the bond market, having perused the above sentence, just read: "semi-bailout." Because if Italy is implicitly demanding assistance from the ECB, and the Spanish bailout vehicle, the ESM, then things are about to hit the country with the €1.25 trillion in debt. It is all downhill from there. Oh, and here is what the bond market reads when they see ESM: "not so semi-subordination." For Reference: see the aftermath of the Spanish bailout. Because if in Europe the idiotic plan to avoid a bank run is to announce preparations for one, followed by furious back pedaling, it is only logical (and we use the term loosely) that an attempt to avert a bailout will be pursued by requesting a semi version. Instead, that action always and only leads to one thing: waving the sellers right in.

From Reuters:

Speaking about the automatic mechanism proposal, Moavero said: "The ECB may do it, but in a framework which would respect its autonomy. The mechanisms would make automatic something that the ECB has so far done autonomously. The European Stability Mechanism (ESM) may also do that, although it cannot act as a bank."


Asked if the ECB should re-start its Securities Market Programme (SMP) of buying bonds on the market, which was originally justified as needed to ensure that markets reflected its monetary policy decisions, Moavero said:


"We do not ask them, because we respect the autonomy of the ECB, but obviously any move to reduce spreads is welcome."


Moavero also said that he doubted if the euro zone's permanent bailout fund, the ESM, would be operational by early July as planned because of the ratification schedule in euro zone countries.

And count your lucky stars that is the case, because the second a class priming, bondholder subordinating mechanism comes into play, forget about comparisons to Uganda - Italy will be Spain right there and then.

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LULZBank's picture

Bail the Fuck out Bitchezz!!!

Manthong's picture

I love the smell of bazookas in the morning. 

The Alarmist's picture

Party on, bitchez ... Bunga Bunga!

Nothing To See Here's picture

And who bails out the bailout providers?

Sudden Debt's picture

Eeuuuuhhhh... Excuse me....
The bank just called and they said your 3 trillion dollar cheque bounced...
Is there a problem we should know about?

Manthong's picture


Hmm..  shouldn’t this though,  fall under the category “penetration, no matter how slight is sufficient to complete the offense”?

SWRichmond's picture

No, it's not a semi-bailout, it's a "semi-automatic [bailout] mechanism".

JHFC, it's a semi-automatic assault-bailout!  It's far too powerful!  Does it come with a high-capacity reloading device that lets the bailouts resume quickly when the CBs have run out of bailout ammunition?

camaro68ss's picture

WTF is a Simi bail-out Bawhahahaha,

Is it like being Simi prego?

Im a simi vergin. hahha

Ghordius's picture

I recall it was fucked when Berlusconi was at the helm. So semi-fucked seems an improvement?

Benjamin Glutton's picture
How many semi's you ask? European Bailout Infographic: Presenting The Truckloads Of Cash Needed To Rescue The Insolvent PIIGS

Doomer's picture

semi-fucked = getting a semi up the poop shute

Divided States of America's picture

Better ask while there's still money left in the bank, thats the ECB that is. Time to front-run the bailout gravy train before the other bankrupt countries (Portugal, Spain, Greece, Ireland) get to more of it first.

Sudden Debt's picture

Let's do the math:

Eurozone = 17 countries...

1. Ireland
2. Portugal
3. Greece
4. Cyprus
5. Spain
6. France (150 billion counts as a bailout)
7. Italy


I wonder when the remaining once will start to discuss if they will still be able to bailout te rest... Maybe at 8 to 9? Or 9 pigs to 8 crickets?

Maybe the ne5 won't be a bankrupt country but a smart country that says "Fuck this shit, I'm out!!!!"

bdc63's picture

The Euro is dead!  Long live the Euro!

Ghordius's picture

right. if necessary we'll have an EUR2. those things have sequels, like QE

looooooong way to go, yet, looooooooong way yet

Dead Canary's picture

The Euro is dead! Long live the Mark, Peso, Lira, Franc....

Doomer's picture

Peso Paseta

Last I heard, Mexico was not in the EU!

valley chick's picture

do the euro math....IMHO, ECB can handle up to and including Spain....with Italy the jig is up.

ArgentoFisico's picture

I thought Belgium already was on the list

Non Passaran's picture

As a Belgian, he's cheating.
But at least he didn't use bold lettering this time. I guess we should be grateful.

Jake88's picture

There's a tax that covers it. It's called inflation.

camaro68ss's picture

So the Euro is simi flat lined?

Carl Spackler's picture

Still stockpiling olive oil.

Three varieties (my inventory liquidation "sale" begins after the supply shortages are firmly in place):

1. Greek  (limited demand - really only by Greeks in the USA)

2. Spanish  (not as common in the Americas but a good quality product, nonetheless)

3. Italian (most widely used in the USA and easiest to sell)


Dull Which's picture

Go long Parmesan cheese and Balsamic vinegar: both require lot's of aging and storage/prduction facilities (no cows!)  were hammered in the recent earthquakes near Modena

Disposable Medical devices too

Silver Bug's picture

The bailouts continue, the QE to infinity continues. They are all broke.

Nothing To See Here's picture

Or is it (Italy + Spain) * Portgual / (Greece * France) = Germany 2013 ? 

bdc63's picture

Uhmmm ... no way.  Every third grader knows you can't divide by zero ...

Eireann go Brach's picture

All of you folks on this site do realize that as much as you bash on Facebook, the ZH up and down arrow serves the same function for you to gain as many green arrows as "likes"! I know you all come back to the page to see how many green arrows you acculumate, just like people do on facebook! So perhaps you all suffer from the same narcissistic delusional disease as those folks on facebook, whereby the tally of green arrows or "likes" one gets, is directly proportional to your levels of self confidence and self importance!

LULZBank's picture

Mark... What has that go to do with a lukewarm semi bailout?

Spastica Rex's picture

Did you just take a psych class at your local community college?

fuu's picture

I think most people use the arrows to agree or disagree with a post rather than reply. Keeps the comments section from getting all cluttered up.

Spastica Rex's picture

Although, on second thought...

pods's picture

What the hell, I gave you a green.  



slewie the pi-rat's picture

bashing narcissism will get him nowhere, here!

he may have been semi-cloned;  i think someone is using his avatar with a muslim name or something...   L0L!!!

Ghordius's picture

semi-cloning is the ultimate compliment

pods's picture

When I first read it I saw it as a rant.  Then I really thought about it.

Yep, I like it when I make a good argument and see the green arrows.  Or a funny joke.  

No different than facebook (I think as I do not partake in that).

So, he does have a pretty solid point.  And I think that when you hit too close to home you get downvoted.

CD taught me to really look at things differently.  So this place is much more valuable than FB IMHO on that reason alone.
Nevermind the breakneck pace of articles and analysis by Tyler and the contributors.

But I think he (or she) is spot on when it comes to what those arrows represent.


PivotalTrades's picture

Its just the subject matter thats different. FB case mindless narsasitic drivel,,ZH Case in most cases the important issues of the day that the masses on FB are ignoring.

pods's picture

Oh I agree.  At least here things that are being discussed are things that actually matter outside the power plant if you will. (in Matrix lingo)

My better half has a FB account and I laugh when she shows me posts of people I know.

Seems it is a place to pretend that your life rocks to all of your pretend friends and they are supposed to pretend that they care.


PivotalTrades's picture

Amazing how immature most of the country is. I can see the kids but even some of them get bored...mine use to be on it up to 1/2 hour or more a day a year or two ago, now once or twice a week  for 10 minutes. Your right about how everybody's life is so rockin. No matter where they go or what thet do it was "great". Grown ups wasting so much time ,,stupid games,, meanwhile "Rome is burning"

mark7's picture

How much did you lose again in the IPO? 

Ragnar24's picture

They're actually the equivalent of saying "hear, hear" -- a term that represents agreement with an ARGUMENT -- or receiving two black balls when Poker Club members didn't see value in a candidate's mind.  

Feedback is critical in the battle of ideas, but not so much when it comes to judging the latest pic from a drunken frat party. 

shovelhead's picture


You are the winner of my one and only junk.


Buck Johnson's picture

If they are stupid enough to continue to hold there debt (both Spain and Itally) after seeing what happened and continue to happen in Greece, then they deserve what they get.  The dominoes is falling as it was fortold.